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Starboard Files Investor Presentation And Sends Letter To AOL Shareholders

Stocks in this article: AOL

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, 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, 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, and Patch drives only 0.02% of visits to
    • 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:

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