Steve Case is allegedly thinking about taking America Online off the hands of Motley Fool Stock Advisor recommendation Time Warner
The venerable, erstwhile guru of dial-up apparently has a death wish (maybe "challenge" wish would be better phraseology). The America Online service just isn't held in the same esteem it once was. Whatever brand cachet it had has evaporated in the ether of slow connections, frequent throw-offs, and buggy hybrid browsers. People are defecting to lower-cost providers in large numbers every day. To make matters worse, when people go broadband, they usually don't think of that goofy -- perhaps even creepy -- yellow running man anymore.
If the rumor is true that Case wants his old job back, it isn't necessarily that surprising a development. After all, it was his baby, and he nurtured it into a pretty healthy child. Problem is, now that child is entering its early teens and becoming downright difficult to control.
Plus, peers such as Microsoft's
Case probably wants to show the writers of business history that they were premature in painting a picture of a tainted legacy. Bravo for that. It would make a great comeback story. But how should Time Warner shareholders view this move?
As Bill and Ted would say: Excellent!
The merger was a great idea in concept, and arguably can still work. A disciplined execution of synergy and culture reforms could fix the problems the company faces.
Here's the thing though: At this point, Case's ISP is such damaged goods -- both in practical terms and the more intangible light of perception -- that Time Warner might simply be better off divesting itself of the elephantine burden. That way, Wall Street would be in a better position to reward the media conglomerate for a quality portfolio of businesses -- such as its magazine division, HBO, and the studio that brought you Lord Of The Rings and Harry Potter -- sans the drag of a no-growth concern.
Imagine that: The Return of the Case. Makes a great 10-hour trilogy, no?
David Gardner recommended Time Warner for Motley Fool Stock Advisor subscribers. Since the inaugural April 2002 issue, David's total average return is 63%, versus the S&P 500's 15.53%. Tom Gardner isn't a slouch himself, putting up an average return of 41.46% over the same time frame. You can sign up for the newsletter with a six-month money-back guarantee.
Fool contributor Steven Mallas still believes in the AOL/Time Warner merger, but is a realist (what a limiting state that is!). He owns no shares of the stocks mentioned in this piece.