AOL: You've Got Fail
By
Rick Aristotle Munarriz
January 7, 2009
|
This can't be good.
Kevin Conroy, AOL's executive VP of products and marketing, is leaving the company. He will head the new-media pursuits of Spanish-language titan Univision.
Time Warner's (NYSE: TWX) online arm has been flopping around lately, but it's certainly not Conroy's fault. In a company memo, AOL CEO Randy Falco praises Conroy's recent accomplishments. Under his watch:
- AOL Mail had a 31% boost in page views last year.
- AOL Music has been a hit, partnering with CBS (NYSE: CBS) after its relationship with Sirius XM Radio (Nasdaq: SIRI) fizzled out.
- Successful apps for Apple's (Nasdaq: AAPL) iPhone and Wi-Fi-enabled iPod Touch have been launched.
The problem with AOL is that there doesn't seem to be a whole lot of growth beyond its free web-based email service. Online ad revenue actually fell by 6% at AOL in its latest quarter. Subscription revenue has been in a swan dive for years, but that is now intentional as AOL is focusing on its free online properties at the expense of its access business.
AOL keeps herding its paying members to the "goodbye" screen. Over the past few months alone, AOL has inexplicably whacked many premium perks, like personal Web pages and online storage. Why doesn't it just sell its access business to Earthlink (Nasdaq: ELNK) before there aren't any subscribers to hand over?
Banking on free email isn't much of an online model. Just ask Yahoo! (Nasdaq: YHOO) and Hotmail parent Microsoft (Nasdaq: MSFT). They continue to lose ground in search to Google (Nasdaq: GOOG) despite having vibrant email properties. It just isn't easy to monetize online mail. AOL's strengths in display advertising are also under pressure in this iffy environment.
In sum, this isn't enough to justify Conroy jumping to Univision. Maybe he sees the inevitability of AOL hooking up with Yahoo! or Microsoft at some point this year, and he figures he may as well make a move on his own terms. If, despite all of his efforts, AOL keeps shrinking, Univision is better than tunnel vision.
Some other recent dot-com dealings:
Follow along with the Global Gains team as they travel to key business centers in China to uncover the very best investing opportunities! Sign up here to receive their FREE dispatches from the road.
Terms & Conditions
RSS Headlines
Fool UK