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Opinion: Verizon gets a lot for little money in its deal for AOL [telecom]

By PHILIP VAN DOORN

Maybe the worst thing about AOL Inc. is its name.

It confuses the coverage of the deal announced today, in which Verizon Inc. plans to acquire AOL Inc. for $4.4 billion in cash.

The name "AOL" associates the current well-run company with one of the worst corporate tie-ups ever. That was the $103.5 billion acquisition of the old Time Warner by the old AOL in January 2001. The all-stock offer made in January 2000 was for $164 billion, but AOL's shares declined considerably before the deal was completed, as just about everyone realized AOL's market advantage as a pioneering provider of dial-up Internet service was going the way of the dodo.

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Reply to
Bill Horne
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Conventional wisdom totally misses the point of the AOL-TW deal. From the AOL point of view, it was brilliant. A company whose value was hugely inflated by a bubble used that stock valuation to purchase an established company with real assets. So AOL shareholders ended up with TW. From TW shareholder's point of view, of course, it was an unmitigated disaster -- they sold more than half of the company for essentially nothing. TW's directors proved they have no place in the world of business. But of course this is America where the CEO class gets compensated richly for doing well and compensated richly for failing.

Reply to
Fred Goldstein

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