AOL Rise 300% Off 12-month Low
courtesy AOL Inc.There are a lot of ways to keep share prices rising and stockholders happy. AOL Inc. (NYSE: AOL) has chosen the direct way: pay them off. The special dividend of $5.15/share, for a total payout of $1.1 billion,…
There are a lot of ways to keep share prices rising and stockholders happy. AOL Inc. (NYSE: AOL) has chosen the direct way: pay them off. The special dividend of $5.15/share, for a total payout of $1.1 billion, is just the latest in a string of share buybacks that have boosted the share price from a 12-month low of around $11 to about $34.
Whether AOL’s share price is sustainable is questionable. Operating cash flow was just $167 million in the most recent quarter, compared to a $957 million inflow from investing, mainly the result of a patent deal with Microsoft Corp. (NASDAQ: MSFT). The company’s subscriber base for dial-up Internet access is dwindling and advertising revenue from its web portal is rising, but not fast enough.
AOL announced another $550 million share buyback program earlier this month that gives the company the ability to acquire almost 20% of the outstanding shares. That ought to keep investors happy for a while longer.
Eventually though, AOL is going to have to boost operating revenues and profits. That could be tricky.
Shares are off today about 0.5% at $33.68 in a 52-week range of $11.07-$34.51.
Paul Ausick
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
