Former Chairman of the FCC Michael Powell (son of General Colin Powell) and investment banker William Hambrecht plans to join the AOL board of directors once the company spins off independently. Time Warner Inc. (NYSE:TWX) currently owns AOL as part of a $164 billion merger that took place in 2000.
The nine directors that will be part of AOL after the spin off also includes CEO Tim Armstrong. Michael Powell currently works for Providence Equity Partners LLC. Providence Equity is currently one of the major investors in Hulu too.
Hambrecht founded WR Hambrect + Co., an investment banking company that works with many Internet companies. Hambrecht has been working at the investment bank since about 1998.
Frederic Reynolds (retired CFO of CBS), Richard Dalzell (former Amazon.com exec), Karen Dykstra (Plainfield Asset Management partner), Patricia Mitchell (President/CEO of the Paley Center for Media), James Stengel (management consultant), and James Wiatt (former CEO of William Morris Agency) will also be joining AOL.
The AOL exodus continues. America Online SVP of Global Messaging David Liu is stepping down next month. Liu worked at AOL for only a year and a half. Liu was the man behind hiring Brad Garlinghouse from Yahoo! Garlinghouse is now going to be responsible for AIM/ICQ, AOL SMS services, and AOL E-mail (”You’ve got mail”). Liu also helped integrate Twitter, Facebook, and other social networks with AOL services. No word yet on where Liu is headed, but this post will be updated when we find out.
AOL has poached another major Google employee. Kristen Kovner worked as the head of industry marketing at Google video website YouTube.com as of this past Friday. However she did not leave without saying or singing goodbye. Above is a video of Kovner singing. And below is the e-mail that Kovner sent to Google co-workers on her way out as posted by Valleywag. Kovner worked at Google for three years.
JP Morgan analyst Imran Khan estimates that AOL is worth $4.2 billion. As you know, AOL is preparing to spin off from parent company Time Warner Inc. (NYSE:TWX). When Google bought a 5% stake in AOL back in 2005, the valuation of AOL was estimated to be about $5.5 billion.
To make Khan’s estimates even credible, Rich Greenfield of Pali Capital pegged AOL’s valuation to be around $4 billion also. The valuation is based on the following estimates by JP Morgan.
AOL bought Third Screen Media, a mobile advertising company in February 2007. The price was not disclosed, but rumor has it that they paid about $80 million. Third Screen Media was rolled into AOL’s Platform-A division, the same unit that runs Advertising.com and PubAccess. Now there is another rumor floating around that Third Screen Media is not making as much money as they had hoped so they’ll end up scaling back the service or shut it down completely.
Rather than focusing on brokering advertising on mobile devices, AOL has strength in building mobile content. According to Silicon Alley Insider, they have heard from mobile industry insiders that AOL is not renewing deals with publishers. AOL is losing customers and is focusing more on internal properties. Many Third Screen Media employees have also supposedly been applying to other jobs.
Before being acquired by AOL, Third Screen Media raised $8 million from TD Capital Ventures and Blue Chip Venture Company. During the time of the acquisition, Microsoft was rumored to be involved with bidding for Third Media also.
AOL CEO Tim Armstrong has fired two major executives recently. Armstrong fired COO Kim Partoll and SVP of search and local media John Kannapell. Armstrong is preparing to spin AOL off from Time Warner as a public company again. People within the organization said that they are not planning on replacing the two anytime soon either.
This past week former Yahoo! SVP of Communications & Communities Brad Garlinghouse joined AOL as the President of Internet and mobile communications. One of Garlinghouse’s core strengths at Yahoo! was voicing his opinion about the company’s flaws. Ever since Yahoo! had their IPO, the company went on a buying binge and struggled to properly integrate companies into their properties. While Yahoo! was busy integrating companies, they lost focus on their search engine. Google quickly sprang up and took over a huge chunk of Yahoo!’s market share.
As a result, Garlinghouse wrote The Peanut Butter Manifesto while working at Yahoo! The memo can be read after the jump. At AOL, Garlinghouse will be in charge of ICQ and AIM. Garlinghouse was mulling over offers from VC firms and other start-ups since he left Yahoo! about a year ago.
Before joining AOL, Garlinghouse worked as an in-house senior advisor at Silver Lake Partners. Silver Lake was one of the investors that bought Skype from eBay for $1.9 billion. Garlinghouse supposedly participated in the Skype deal.
Garlinghouse will run AOL’s operations from the Mountain View, California campus. The Mountain View AOL office used to be the headquarters of Netscape Communications. AOL has a few hundred employees in Silicon Valley.
AOL has a new Chief Financial Officer. His name is Artie Minson and he was a previous EVP and Deputy CFO at Time Warner. Before Time Warner, Minson worked at AOL in a Corporate Finance and Development position.
“Artie’s strong financial acumen, operating experience, and deep understanding of our company and the Internet and content industries make him a perfect fit for AOL,” stated AOL CEO Tim Armstrong. “He’s also a public company veteran who helped handle Time Warner Cable’s transition to a public company. Artie will hit the ground running and be a tremendous asset to AOL as we focus on driving growth, value and innovation.”
Minson has an Accounting B.S. degree from Georgetown University and an MBA from Columbia Business School.
AOL has filed a lawsuit against Advertise.com. Advertise.com used to be known as ABCsearch.com. ABCsearch bought Advertise.com for an undisclosed price earlier this past year.
The lawsuit states the following:
“…Advertise.com recently commenced use of the virtually identical and confusingly similar designation Advertise.com and design in connection with the same and complimentary services as those offered by Plaintiffs under their federally-registered Advertising.com name and marks and their Ad.com name and marks.”
AOL believes that Advertise.com would cause consumer confusion for those that are interesting in Ad.com or Advertising.com. AOL does not own the domain name Ad.com but had previously referred to Advertising.com as Ad.com.
OurStage is a music discovery website that plugs itself as an “online American Idol.” The company has raised about $3 million out of a planned $6 million round of funding. Thus far the company raised $20 million total.
OurStage CEO Ben Campbell said that the company should be profitable by 2010. And former Sony Music CEO and Chairman Don Ienner recently joined the OurStage Board of Directors.
OurStage allows indie artists to upload music in order to build fans, similar to MySpace. OurStage users can also set up clubs and venue information. Fans can also rate the music uploaded by artists.
OurStage shares revenue from the tracks with the artists. Another revenue stream OurStage has going is display advertisements. AOL’s Platform-A division is responsible for OurStage’s display advertising. AOL Music also has a deal in place with OurStage.
AOL social network subsidiary Bebo.com has named a new head of global operations, Stephane Panier. Panier will be responsible for scaling the social network’s media operations and advancing the global reach of the service. Currently Bebo has 24 million users around the world. Panier was previously the VP and COO of Bebo. Panier will be reporting to Jon Brod, the EVP of AOL Ventures.
Before joined Bebo in January 2009, Panier worked at Google for 6 years in finance and operations positions. “Stephane is a proven strategist and operator with executive experience from some of the world’s leading brands and businesses,” stated Brod. “He is the ideal leader to build on Bebo’s existing successes, to chart a course for its future, and to execute against that vision.”
In December 20, 2005, Google announced a strategic alliance with AOL. The financial agreement was that Google would invest $1 billion in AOL for 5% ownership. According to the press release sent out at the time, the strategic agreement would go as follows:
* Creating an AOL Marketplace through white labeling of Google’s advertising technology – enabling AOL to sell search advertising directly to advertisers on AOL-owned properties;
* Expanding display advertising throughout the Google network;
* Making AOL content more accessible to Google Web crawlers;
* Collaborating in video search and showcasing AOL’s premium video service within Google Video;
* Enabling Google Talk and AIM instant messaging users to communicate with each other, provided certain conditions are met; and
* Providing AOL marketing credits for its Internet properties.
Due to Time Warner’s desire to spin off AOL as its own separate entity and several other complications, Google decided to cancel the deal and cash their losses.
Google took a major hit financially when cashing out on their 5% AOL ownership. Even though they invested $1 billion, they sold the equity for $283 million back to Time Warner. The transaction took place on July 8th and is based on pegging AOL’s valuation at $5.7 billion.
As of right now it is unclear what changes will be made strategically between Google and AOL after the Time Warner subsidiary spins off as an independent entity. I doubt much will change.
Yesterday Michael Jackson died from a heart attack.
AOL’s TMZ first reported the story and spent all night covering the story as it developed. As a result, TMZ’s traffic spiked and they had the capacity to keep the website online while their competition’s servers couldn’t handle it.
TMZ wasn’t the only one that had traffic spikes. On Twitter over 5,000 messages were sent out per minute shortly after the Michael Jackson news story broke. The number of tweets doubled according to Biz Stone. AOL Instant Messenger and LiveJournal’s servers also took a big hit, causing a slowdown. The Los Angeles Times website hit about 2.3 million pageviews in one hour after the news story broke. Facebook status updates tripled from the average.
AOL has bought out a local news website called Patch.com. Tim Armstrong invested seed capital in Patch.com back in 2007. As part of the deal, Armstrong will not profit from the seed investment he put in. However, he will receive his seed capital back through AOL shares once the company separates from Time Warner.
Armstrong’s seed capital was made through his private investment company Polar Capital Group. Another acquisition that AOL announced is Going.com. The price of both properties were not disclosed.
The full press release is available after the jump.
The ability to create applications around platforms is what is driving social media today. Developers are making a killing by developing applications for Facebook, the iPhone, Twitter, etc. But what many people don’t realize is that AOL was one of the original platforms to develop applications around. Sure there wasn’t a such thing as APIs back then, but a lot of developers today started by building software intended to modify AOL services.
I remember back in the late 1990’s, I knew at least 4-5 people that spent time on Visual Basic creating an application that enhanced AOL chat rooms. That is around the same time when Warez groups on AOL started. Each Warez group would team up on building different applications. These applications would be similar in functionality but different in branding. A lot of the functionality would have to do with requesting MP3s in chatrooms, punting users offline, and sending a lot of ASCII pictures in a chat room at once. Those were the days.
Now look what we are stuck with today. Some of today’s popular Facebook Applications revolve around taking quizzes, describing what music and movies you like, and what your zombie vs. werewolf score is. Yawn.
However it is interesting to know that AOL was the inspiration behind Facebook’s application platform according to Mark Zuckerberg.
“I remember when I was a kid in high school, some of the first things that I built were add-ons to AOL. All of my friends were on AOL, and I built tools for IM or servers to run chat rooms, and I just had so much fun and that’s how I learned how to program. I just think it’s really interesting to see the new generation of college students that are growing up and building on top of this platform, and anything that we can do to encourage that is awesome,” stated Zuckerberg in an interview with InsideFacebook.
