July 10, 2009

AOL Reviews Assets, But Will Keep Bebo

AOL CEO Tim Armstrong said that the company is reviewing its assets to sell or divest, but is planning on keeping its social networking site Bebo.

Armstrong told Reuters on Thursday that the social networking site has "great value" and it will be moved to a Ventures unit of the online company so that the site can be improved.

The move has raised questions that AOL might sell Bebo, which has fallen behind in the social networking industry.

Armstrong said, speaking at the Sun Valley media and technology conference in Idaho, that other AOL assets are under review for possible sale or divestiture, but no specifics were given.

The former Google Inc. executive was appointed in March to review AOL operations for 100-days.  Later this month he is expected to present his strategy. 

AOL relies heavily on advertising revenue and has been struggling because of the decline in the Internet access business.  Its share of the U.S. search market has dropped to 4 percent from 12 percent three years ago.

There are still a lot of concerns about how AOL will maneuver through the advertising recession after it splits from Time Warner around the end of this year.

"More than any other player this year, everyone wants to know where they go from here post-Time Warner," said Standard & Poor's analyst Tuna Amobi.


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