Ouch. But wait. There’s a silver lining.
Back when the deal was done, analysts like…me… suggested that AOL was going to go public, and that Google was going to profit from that. Well, looks like AOL will go public…but not at the lofty valuation 2005 seemed to promise. Of course, Time Warner dithered for five years about whether to spin the damn thing out (I pleaded in a blog post in 2004 that they do this). Had they done in then, or even in 05 or 06, I’d wager Google would have looked pretty damn smart.
Now, they’ve lost $717 million on the deal, but let’s not forget, they did keep the AOL distribution for their search services, and that’s certainly worth a lot. Not to mention, Google really owes AOL one for the solid that company did in giving their business to Google back in 2002. That deal pretty much set Google’s table for a good seven year feast, one that was so rich, Google can afford to write down more than half a billion dollars. And as you may recall, the company already has. Looking at the math, Google wrote it down $726 million back in Q1. That means, if my math is right, Google in fact MADE $9 million on the deal. Whadya know?!