This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Starboard Files Investor Presentation And Sends Letter To AOL Shareholders





















NEW YORK, May 7, 2012 /PRNewswire/ -- Starboard Value LP (together with its affiliates, "Starboard"), one of the largest shareholders of AOL Inc. ("AOL" or the "Company") (NYSE: AOL) with current ownership of approximately 5.3% of the outstanding shares, today announced that it has filed an investor presentation with the Securities and Exchange Commission ("SEC") and has delivered a letter to AOL shareholders.  Starboard said the purpose of this letter and presentation is to share additional information about Starboard, its views regarding AOL's current strategy, and a high-level preview of the initiatives Starboard believes should be evaluated and implemented to improve AOL's operating performance.  

Starboard is urging shareholders to vote the GOLD proxy card to elect its three highly qualified nominees, Dennis A. Miller, Jeffrey C. Smith, and James A. Warner, in place of incumbent directors Alberto Ibarguen, Patricia Mitchell, and James Stengel, at AOL's upcoming Annual Meeting scheduled to be held on June 14, 2012.

In the presentation, which is available for viewing on the SEC's website at http://tinyurl.com/starboardvaluepresentation, Starboard discusses that:

  • Despite amassing a large content business with over 100 million unique visitors and $573 million in revenue, it believes AOL's Display business is losing more than $500 million per year(1).
    • AOL's challenges in Display are a direct result of the Company's high cost strategy, which is based on substantial in-house editorial and sales personnel.
  • Patch is a structurally flawed business model that Starboard believes loses $150 million per year(2).
    • The business is high cost and is not scalable.
    • Patch's value proposition for local advertisers is poor given the lack of an attractive measurable ROI and high effective CPMs.
    • Even at Patch's target revenue model, Patch would still lose money.
  • Based on Starboard's analysis of the key drivers of Search on AOL.com, the Display business should be analyzed independently from Search and AOL's other assets.
    • AOL's owned content properties drive less than 2% of visits to AOL.com, and Patch drives only 0.02% of visits to AOL.com.
    • Owning and producing content does not necessarily improve engagement versus outsourcing content.
  • The Company must dramatically improve the profitability of its Display business and either sell, partner or shut down Patch.

The full text of the letter to AOL shareholders follows:

1 of 7

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs