What kind of unjust world do we live in where money-losing companies such as LinkedIn and Pandora can launch highly anticipated IPOs, while Internet dinosaur AOL can't attract the slightest amount of irrational investor interest?
(Also see: At AOL and HuffPost, it's all about quality)
An unfair world, if you ask AOL chief executive Tim Armstrong. From the Wall Street Journal:
In his opening remarks during a day of presentations to investors last week, the AOL Inc. chief executive pointed to the high-flying valuations of smaller technology companies that have recently gone public, some without profits, as a sign investors have "severely undervalued" AOL.
The man might have a point. Here are AOL's bona fides for the discerning irrational investor:
* Fiscal year 2010 earnings: -$782,500 million (-$7.34 EPS)
* Fiscal 2011 Q1 revenue: $551.4 million, down 17% from a year ago
* Fiscal 2011 Q1 earnings: $4.7 million (0.04 EPS), down 86% from $34.7 million (0.32) a year ago
* Fiscal 2011 total subscribers: 3.6 million, down 22% from a year ago
* Fiscal 2011 unique visitors to AOL Properties: 112 million, same as a year ago
Yet AOL's market cap is a piddly $2.1 billion, while LinkedIn (NYSE: LNKD) is worth $5.7 billion (and falling fast) and Pandora (NYSE: P) is worth $2.35 billion.
Granted, AOL hasn't shown it can lose money as consistently as LinkedIn, Pandora, or Demand Studios (NYSE: DMD), but under Armstrong's leadership, it's headed in the right direction.
So, c'mon investors! Clearly it's time to get irrational about AOL. They've earned it!