Search Biz: AOL Spin Off, Yahoo Layoffs, Google Losses, IAC Spoons And Pines For AOL

The biggest Search Biz news of the week is about AOL’s forthcoming spin off and related personnel moves. Time Warner yesterday announced quarterly revenues and a whopping $16 billion loss (not the largest in the company’s history). For its part, AOL’s ad revenues fell roughly 20 percent to $867 million from $1.13 billion the previous year. The primary cause was weakness in online display advertising. The ISP business also declined.


Source: Time Warner earnings release

In addition, Time Warner yesterday confirmed the long-expected intention to sell or spin off the AOL unit. The precise form of the separation hasn’t yet been chosen but the “announcement” came in Time Warner’s 10Q filing with the US SEC in which the company said the following:

During 2008, the Company announced that it had begun separating the AOL Access Services and Global Web Services businesses, as a means of enhancing the operational focus and strategic options available for each of these businesses. The Company continues to review its strategic alternatives with respect to AOL. Although the Company’s Board of Directors has not made any decision, the Company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner’s stockholders, in one or a series of transactions. Based on the results of the Company’s review, future market conditions or the availability of more favorable strategic opportunities that may arise before a transaction is completed, the Company may decide to pursue an alternative other than a spin-off with respect to either or both of AOL’s businesses.

Today AOL announced that Google VP Jeff Levick will join the company as President, Global Advertising and Strategy (Platform A), replacing Greg Coleman who was previously at Yahoo. We’re speculating but Levick could be the first of several execs that Armstrong might bring over from Google in the same way that Sheryl Sandberg brought a number of Googlers to Facebook after she took the number two job there.

AOL CEO Tim Armstrong also said in a recent interview that he wants to simplify AOL’s lineup of brands as well as bring renewed focus to the user experience at the portal. Speaking of brands, once again Armstrong’s former employer Google is the world’s top brand according to Brandz top 100 Most Valuable Global Brands survey.

In other Google news, DoublClick CEO David Rosenblatt, who became Google’s president of global display advertising after the acquisition announced that he will leave the company in mid May. The New York Times reflects investor concern about Rosenblatt’s departure as well as the loss of other senior execs, such as Amstrong and Levick. Display advertising is one of the three or four key strategic growth areas Google identified on its most recent earnings call.

On the Yahoo earnings call a week ago, CEO Carol Bartz announced another round of layoffs (the third in 12 months). Those layoffs have begun in the US and India (although Yahoo plans more hires in India too). Apparently the Flickr team is being hit especially “hard” by the reorganization. However Flickr is one of Yahoo’s great assets and it would both be unfortunate and a strategic mistake if the product were to be compromised by the personnel moves.

Less strategic than Flickr, Yahoo is discussing the sale of Yahoo Personals to IAC, which owns IAC itself reported a loss yesterday, as it announced the acquisition of restaurant site and popular iPhone app Urbanspoon. IAC could also become a suitor for AOL. IAC CEO Barry Diller expressed interest in the portal in an interview, though he says a combination of IAC and AOL would be “complicated”:

We talk with AOL a lot, and there’s a lot of common relationships there. We’re, I think, the seventh- or eighth-largest Internet network, and I think AOL is one or two slots behind us. There’s a really good idea for a combination there, but it’s complicated to do. It’s inside Time Warner, which wants to get rid of it. It’s hard to engineer because of its legacy. But, industrially, it makes sense.

Related Topics: Channel: Industry | Search Biz


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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