Comments on: With AOL Deal, Google May Get to Go Public Again

By: JiggaDigga

JiggaDigga — Fri, 07 Apr 2006 16:46:34 +0000

Great reading, keep up the great posts.
Peace, JiggaDigga

By: Stuart MacDonald

Stuart MacDonald — Tue, 20 Dec 2005 03:25:04 +0000

It’s true that AOL has been (and to a great extent still is) a dial-up ISP. However, it’s interesting that in Canada — where their ISP business never amounted to much for a bunch of reasons — as a “Hail Mary” they opened the door to much of their content. Guess what? They are now the number two portal roll-up (public web) in the Country. By saying “let’s face it, we are not an ISP up here” they have created some very valuable advertising real estate, and likely assured their future. I would be surprised if AOL US hasn’t taken notice.

- Stuart

By: Jakob Nielsen

Jakob Nielsen — Tue, 20 Dec 2005 01:43:07 +0000

Just because Google paid $1B for 1/20 of AOL doesn't mean that AOL is worth $20B. Google may well have overpaid in order to shut out Microsoft. Two possibilities: (a) winner's curse in an auction - whoever paid the most by definition paid more than anybody else wanted to pay, or (b) it was a good deal for Google because they got something extra beyond a share of AOL (i.e., delaying Microsoft's growth in search - something that has no value to anybody else except Yahoo).

Whether (a) or (b) is true, it follows that all of AOL is worth less than 20x this deal, because nobody else would overpay by as much.

As dialup goes away, AOL is losing its one unique advantage: the large number of loyal customers who used it because it's the easiest way to get online through a modem. (This includes myself: I still have an AOL account to use when dialing in from some obscure locations where they have access numbers and nobody else offers access. Such places are getting fewer by the year.)

Yes, maybe AOL can offer content and services on the open (non-dialup) Internet that can compete with Yahoo and best-of-breed sites, but it's not a sure thing, and likely to be very expensive.

By: Joe Hunkins

Joe Hunkins — Mon, 19 Dec 2005 22:48:27 +0000

Clever thinking but I still can’t help thinking that AOL’s poor reputation will do more damage than Google will wind up recouping in an AOL IPO. Will people really want to own a piece of tired old AOL when they can invest in bright and shiny new companies with infinite potential?

By: pwb

pwb — Mon, 19 Dec 2005 22:25:54 +0000

I doubt Google’s looking for much of a financial return, *if* the deal even happens. Damian has it right, Google keeps some revenues and blocks Microsoft.

By: Andre

Andre — Mon, 19 Dec 2005 21:15:28 +0000

@ Jojo … i see it like you with the costs and i think, thats google need some invoices… it goes against end of year.

in future it is interesting and important for microsoft to do better work if they not want that the users goes from msn to the new bigOne

By: Damian

Damian — Mon, 19 Dec 2005 16:06:10 +0000

John – I agree with your post for the most part, but there are two other reasons why Google would invest: to protect revenue and keep Microsoft at bay. Both of those are just as important as the value of the investment increasing at this point.

By: Jojo

Jojo — Mon, 19 Dec 2005 14:03:26 +0000

60 billion? You are crazy. As Rajesh says we need to know the earnings an expected growth in earnings to value AOL. With actual earnings of 1-2 billion $ and an annual earnings growth of 20% I could accept 60 billion $.

By: Rajesh Patil

Rajesh Patil — Mon, 19 Dec 2005 08:14:14 +0000

AOL 60 billion post-IPO !!! Good grief !

I would base the value of AOL on 2 facts. Current earnings and the expected growth in earnings over the next 2 years. Is this data too confidential to be blogged.

By: Jason Wood

Jason Wood — Mon, 19 Dec 2005 03:15:38 +0000

John,

You're spot on. I made the point that we very well could be seeing an AOL IPO, Part Deux in the offing. While I don't think GOOG had an AOL IPO in mind [or at least not as a driving factor in the AOL stake], I DO think Time Warner had the $20 billion post-money valuation in mind when they agreed to the $1 billion from Google in exchange for 5%.

You may have seen my post directly or on tech.meme, but if not...

http://woodrow.typepad.com/the_ponderings_of_woodrow/2005/12/aol_ipo_part_de.html