AOL Rise 300% Off 12-month Low

Before you go, we thought you'd like these...
Before you go close icon

There are a lot of ways to keep share prices rising and stockholders happy. AOL Inc. (NYSE: AOL) has chosen the direct way: pay them off. The special dividend of $5.15/share, for a total payout of $1.1 billion, is just the latest in a string of share buybacks that have boosted the share price from a 12-month low of around $11 to about $34.

Whether AOL's share price is sustainable is questionable. Operating cash flow was just $167 million in the most recent quarter, compared to a $957 million inflow from investing, mainly the result of a patent deal with Microsoft Corp. (NASDAQ: MSFT). The company's subscriber base for dial-up Internet access is dwindling and advertising revenue from its web portal is rising, but not fast enough.

AOL announced another $550 million share buyback program earlier this month that gives the company the ability to acquire almost 20% of the outstanding shares. That ought to keep investors happy for a while longer.

Eventually though, AOL is going to have to boost operating revenues and profits. That could be tricky.

Shares are off today about 0.5% at $33.68 in a 52-week range of $11.07-$34.51.

Paul Ausick


Filed under: 24/7 Wall St. Wire, Dividends & Buybacks, Internet Tagged: AOL, MSFT
Read Full Story

Markets

S&P 500 2,242.44 1.09 0.05%
DJIA 19,574.80 25.18 0.13%
NASDAQ 5,414.88 21.12 0.39%
DAX 11,185.81 199.12 1.81%
HANG SENG 22,861.84 60.92 0.27%
NIKKEI 225 18,765.47 268.78 1.45%
USD (per EUR) 1.06 -0.01 -1.30%
USD (per CHF) 1.02 0.01 0.96%
JPY (per USD) 114.20 0.49 0.43%
GBP (per USD) 1.26 -0.01 -0.53%

From Our Partners