Blogs are Stupid

For the AOLers, a story from Fortune magazine about Time Warner. Interesting/long read.
(You may need to load this in AOL)

Will Wall Street Ever Trust Time Warner

Some highlites:

* Parsons says the company is likely to use some of its cash to pay a dividend or buy back shares; the stock would probably get a small bump from either move. He also predicts that the cable unit will continue to post strong results, which might give shares a further lift in the second half of the year. The biggest surprise: If AOL fails in its latest effort to capture more online ads through its free portal, which will offer an online search engine and features that previously had been available only to AOL subscribers, Parsons says he would consider spinning off the division as a separate stock. "If it works," he says, referring to the portal strategy, "this business looks like our publishing business, it looks like our TV business, it looks like our local cable advertising business." He has no timeline in mind, but says, "If this doesn’t work, then you start to think about AOL much differently. You start to think about AOL in somewhat the same way I think about the cable company—we’d have access to the platform, but it would have its own currency to go out and do acquisitions or other deals. We’d have to find a way to maximize the value for our shareholders

Not that Parsons or his lieutenants—Jeff Bewkes and Don Logan—are considering a full-fledged breakup like those other media companies are currently mulling. Time Warner would retain a controlling stake in the cable and probably in any AOL spinoff too. "We’re not trying to figure out the flavor of the day," insists Logan, the blunt former Time Inc. CEO who now serves as chairman of the corporation’s communications group. "Look at Viacom: Now they’re going to break it in two. What the hell for? I can’t figure it out. Can you?"

* America Online CEO Jon Miller is standing on the balcony of his office—Steve Case’s old digs—in Dulles, Va., showing off the sprawling campus. He points to a huge building filled with AOL programmers and a bustling day-care center. It is a reminder of just how big AOL remains. "I still have people come up to me and ask, ‘Do you guys make any money?’" Miller says, shaking his head. Last year AOL posted $934 million in operating income and contributed about $1 billion in cash flow to Time Warner

* Test versions of the AOL.com site, which will launch later this year, look promising: True to AOL’s heritage, it is easy to navigate and boasts some consumer-friendly features such as a pull-down bar on the browser that contains little images (not just web addresses) of the sites you’ve just visited. Almost all AOL content, including news and information—and even goodies such as a hit online concert series—will be available free.

But one can’t help getting the impression that AOL’s strategies are a little stale. Indeed, it seems to be reinventing itself in the image of a more successful and more highly valued company—Yahoo. AOL’s big plan for retaining subscribers—partnering with cable companies—feels a lot like Yahoo’s alliance with telcos SBC and Verizon. (The only company AOL has announced a deal with is its sister Time Warner Cable.) Similarly, the plan to capture online ad dollars, the hottest area of advertising right now—shouldn’t AOL have been on that years ago?