AOL faces dissident shareholder

The AOL logo is posted on a sign in front of the AOL Inc. offices in Palo Alto, Calif. Starboard Venture has a 5 percent stake in AOL. Now it wants three seats on the board of directors.

David Brancaccio: Activist shareholders are planning to bring their fight with AOL to the online portal's annual meeting in Boston this morning.

They don't like AOL's turnaround strategy and they're trying to shake up the board, as Marketplace's Queena Kim reports.


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Queena Kim: AOL probably cringes at this relic. But its dial-up business is what keeps the company profitable. And those profits are paying for AOL’s money-losing turn-around strategy, which includes something called Patch, a network of neighborhood news sites meant to bring in local advertising. It lost about $150 million last year.

Clay Moran: Starboard argues that it will not reach meaningful profitability ever, ever.

Clay Moran is an analyst with Benchmak. He says Starboard wants AOL to sell Patch or shut it down.

Ben Schachter, an analyst with Macquarie, says not so fast.

Ben Schachter: They need to figure out how to do this profitably but I don’t think they need to have their hand forced. 

He adds that AOL’s recent billion-dollar patent sale to Microsoft gave AOL’s stock a boost. And Moran says that’s not good news for Starboard.

Moran: Shareholders will probably give AOL’s management a pass this time.

But, long-term, it may only be a Patch.

In San Francisco, I’m Queena Kim for Marketplace.

About the author

Queena Kim covers technology for Marketplace. She lives in the Bay Area.

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