If every action has a reaction, then every corporate decision has a consequence. Take, for instance, the recent moves by media companies to keep profit margins high through layoffs or buyouts. It make make the bottom line look better now but the long-term consequences could be far different. Time Warner Chairman Dick Parsons is caught in one of those short-term/long-term dilemmas now as Carl Icahn and some other shareholders push for more value; I was going to write instant gratification but that isn’t fair given how this stock took a big hit and has been stuck for so long. David Wilkerson does a good job of unpeeling the difference of opinion over keeping most of Time Warner Cable instead of spinning it off completely.
As for whither AOL, James McGlynn, manager of the Summit Everest Fund (which owns TW shares) told Wilkerson: “I can definitely understand why Parsons doesn’t want to just punt AOL. If they get rid of it, they’ve got to turn right around and say, ‘OK, what’s our Internet strategy?’ You’ve seen News Corp. buying these Web sites. Time Warner already has one; now can they get the most value out of it? We’ll see.”
Randal Stosser suggests it’s time to stop looking at AOL as a “dead man walking” and as a “defiantly healthy” concern. Forrester Research analyst Charlene Li tells the NYT, one thing the company won’t be doing is competing for the hard-core Google user: “They’re not going to get the hard-core Google users, and they know that.” Instead, AOL.com will try to lure former subs to take a second look.
Jupiter Research analyst David Card suggests AOL actually comes out ahead with its late portal entry, because the fresh start allows an all-broadband approach.
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