Jessica Reif Cohen, Merrill Lynch: TWX perspective: While we had suggested that selling equity in AOL at current valuations would be a mistake, the small size of the deal (only 5% of AOL and just over 1% of TWX’s market cap) makes it relatively insignificant from a financial perspective. We believe the real key is if the new agreement will help drive improved operational and financial performance for AOL. … Initial reports suggest that Google will provide a significant amount of advertising inventory for AOL properties. This is particularly important as we have yet to see evidence of a pickup due to the opening of AOL.com to the general public.”
Lauren Rich Fine, Merrill Lynch: Google perspective: “This confirms to us that Google does value AOL as a leading partner and we believe sends a strong competitive message to Microsoft. Clearly, it is in Google’s best interest to hold onto its largest customer…The transaction would also preclude Microsoft from getting the business.”
Michael Gartenberg, Jupiter Research (via FT): “They’ve worked very, very hard to persuade the market that they’re not playing favourites in terms of content. That’s an arrangement they want to preserve.”
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