12/27/05: Online “media” gargantuan Google has just acquired 5% of AOL from TimeWarner for a mere $1 billion. Not bad for a days work, if you’re AOL. Or is it? AOL has been struggling since the ill-fated AOL/TimeWarner merger back in 2000. Now, as web advertising is poised for major growth in the next decade, AOL has smartly positioned itself to take advantage. So–on paper–selling a small portion of its common stock to Google seems like a very good idea. As of now, Google is the “it” company of the media elite. Its revenues will never stop growing and neither will the value of its stock. As a matter of fact, this affiliation can only increase value on both sides. If this sounds remotely familiar, you’re on the right track. In hindsight, the AOL/TimeWarner merger was a great idea at the time. It unfortunately occurred at a time when stocks were overvalued. Hopefully, the same won’t be said of Google. However, at some point, even for a media darling like Google, the music does stop playing.
PS. Have a happy and healthy New Year!
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