Though it may feel longer to AOL (UNKNOWN:AOL.DL) shareholders, it's only been three weeks since the Nov. 6 announcement of its stellar Q3 financials. Not surprisingly, AOL's share price closed Nov. 6 way up, and only marginally off its 52-week high. Unfortunately, the good tidings lasted all of one day.

So, what happened? Was the initial run-up simply market exuberance, that's since been tempered by more analytical minds? Or, as quite often happens, once investors made it past the headlines, they opted to focus on flat domestic ad revenue, and ignore international ad growth? Or, maybe it was the 18% drop in "other" revenue, even though it was little more than an accounting change relative to mobile users in Q3 of 2011?

Where AOL stands today
Despite the drop in AOL share price the past several weeks, it remains one of the market's top performers year to date, up over 143% in 2012. Also considering AOL's one-time $5.15 per share dividend for shareholders of record on Dec. 5, it's really, really cheap.

CEO Tim Armstrong's vision of transforming AOL from an ISP into a content-laden site wasn't just a sound strategic business decision -- it's working. The content includes AOL's Huffington Post, and the video-rich On Network, both extremely successful content-rich online destinations. In fact, the sites generated $0.22 a share in net earnings for AOL in Q3.

The On Network is now the second-most-viewed video site on the Internet. More importantly, AOL translated its growth in users -- unique visitors are up 4% over last year -- to the recent quarter's double-digit improvement in revenue.

So, what's the problem?
The concerns surrounding AOL are the same as when its shares jumped 15% after the earnings announcement -- it's a crowded online advertising world, and getting more competitive by the day. Facebook's (NASDAQ:FB) recent earnings release was chock-full of positives, including a significant improvement in advertising revenue. The news that Facebook is now offering advertising customers a sales tracking and ROI measuring tool is yet another indication its getting serious about this advertising revenue thing, becoming a bigger challenge for AOL.

Online advertising and content leader Google (NASDAQ:GOOGL) may have its fingers in multiple pies -- tablets, smartphones, and its Android OS, among others -- but it remains the online king. AOL's On Network? Yeah, it's performing well, and generating revenue, but still lags Google's YouTube. Perhaps most like AOL, if not in size, certainly in its business transformation phase, is Yahoo! (NASDAQ:YHOO).

Like a lot of investors the past several months, I don't think there's any doubt Yahoo! CEO Marissa Mayer's on the right track. Selling a big stake in Alibaba, then pledging to return $3 billion of the $4.3 billion Yahoo! netted from the deal to shareholders, helped placate disgruntled investors. Like AOL, Mayer continues her emphasis on content and user experience -- both sound objectives.

The challenges facing AOL haven't changed, nor will they going forward. Competition is always going to be fierce, not only from stalwarts like Google and Facebook, but Yahoo! is coming on fast (and is the only one close to AOL based on value). But with all that, AOL represents a great opportunity.

With $867 million in cash and equivalents as of last quarter, and no long-term debt, AOL is sound financially. CEO Tim Armstrong's objective of reducing AOL's shares outstanding 30% by year's end is on track, and should boost shareholder value. Even before pricing pressures struck following its earnings announcement, AOL was an outstanding value. Now? Considering its one-time dividend yielding a cool 5.25% and recent results, AOL is a value-lover's dream come true.

Fool contributor Tim Brugger has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook, Google, and Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.