Share

AOL taps Google exec as CEO

San Francisco - An executive from Google is becoming the latest CEO of AOL, raising hopes that he will be able to turn around Time Warner's struggling internet unit.

Tim Armstrong, who had been a senior vice president at Google and head of the company's North and South American advertising operations, replaces AOL CEO Randy Falco, a veteran TV executive who took the job in November 2006. Falco, along with Ron Grant, AOL's president and chief operating officer, are leaving AOL.

Armstrong, 38, also will take over from Falco as chairperson.

This shake-up could mean a spin-off of AOL is more likely. Time Warner CEO Jeff Bewkes has said he's open to a merger or sale of AOL, and in a statement Bewkes said Armstrong would help Time Warner "determine the optimal structure for AOL."

"Tim is the right executive to move AOL into the next phase of its evolution," Bewkes said. "At Google, Armstrong helped build one of the most successful media teams in the history of the internet."

Armstrong worked at Google for 8 years. As the company's first employee outside of Mountain View, he started its New York office.

The transition is another sign of turmoil in Time Warner's decade-long attempts to salvage its 2001 acquisition by AOL, once known as America Online. The $147bn AOL-Time Warner deal symbolised the astonishing wealth created by the dot-com boom and quickly became one of the most disastrous marriages in US corporate history.

Great place for challenges

During the past few years, AOL has been realigning itself around three core businesses - its "Platform A" advertising unit, "MediaGlow" publishing unit and "People Networks" social media unit. These businesses are meant to bring in revenue through online advertising, as a way to offset losses from its fading dial-up Internet access service.

Besides realigning AOL, Time Warner has made moves to separate the dial-up operations from these ad-focused businesses, which would make it easier for Time Warner to sell one or both.

A recent reminder of its ongoing troubles came in February, when Google - which paid $1bn in 2006 for a 5% stake in AOL and is its largest shareholder aside from Time Warner - triggered an escape clause in its contract with AOL. The clause forces Time Warner to spin off Google's holdings through an initial public offering or repurchase the stake at current market value.

This came after Google wrote off $726m of its investment in the fourth quarter because of AOL's falling value. Google had made the investment in an effort to increase its advertising partnership with AOL and prevent rival Microsoft from trying to get involved with the company.

Richard Greenfield, an analyst with Pali Research, called the management change "a huge positive all around" for Time Warner investors. With Armstrong at the helm, he thinks it's more likely that Time Warner will eventually separate the AOL unit from its main business.

Kevin Lee, chief executive of search marketing firm Didit, feels the same. If the economy and stock market improve, and Armstrong is able to shape up AOL, Lee thinks it is possible that Time Warner would spin the business off as a public company or sell it.

Regardless, he's certain Armstrong has plenty of work ahead of him.

"If he wanted challenges, he picked a great place for challenges," Lee said.

- AP

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.99
-0.2%
Rand - Pound
24.14
-0.1%
Rand - Euro
20.64
-0.2%
Rand - Aus dollar
12.39
+0.3%
Rand - Yen
0.13
+0.5%
Platinum
913.65
-1.1%
Palladium
1,016.50
-4.6%
Gold
2,158.65
-0.1%
Silver
25.07
+0.1%
Brent Crude
86.89
+1.8%
Top 40
66,252
0.0%
All Share
72,431
0.0%
Resource 10
53,317
0.0%
Industrial 25
100,473
0.0%
Financial 15
16,622
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders