Why AOL Shares Skyrocketed

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AOL (NYS: AOL) have skyrocketed by as much as 47% today after the company agreed to sell patents to Microsoft (NAS: MSFT) .

So what: The Internet pioneer is selling more than 800 patents to the software giant in a $1.1 billion deal, in addition to a nonexclusive license to the rest of its patent portfolio. The company also said it was planning on returning a large chunk of the proceeds to shareholders.


Now what: AOL investor Starboard Value has been calling for AOL to tap into its patent portfolio and estimated it could bring in roughly $1 billion. Many other analysts thought AOL's intellectual property was worth only $300 million, so the $1.1 billion price tag is a nice surprise for shareholders. CEO Tim Armstrong said the deal resulted from a "robust auction process" for its patents.

Interested in more info on AOL? Add it to your watchlist byclicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Microsoft.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Microsoft. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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