Google Wants Out, Tells Time Warner to Take AOL Public

 

And Google isn’t just trying to share some investing advice with an old friend.  Google wants its money back, plain and simple.  Or at least it wants to recover a sizeable chunk of the $1b write-down they took on their 2005 AOL investment.   

A lot has changed since Google’s investment gave AOL a $20b valuation.  Economic and advertising pressures have driven AOL’s value down 73% to just $5.5b.  With that, Google recently made it clear that the best way to try and recover its money was to “exercise its right” and see that AOL is publicly traded so that they can sell their shares “when the timing made sense.”

Google was careful to say that AOL remains “an extremely valued partner”, which isn’t surprising because they don’t want to further erode their investment with a vote of no-confidence.  But Time Warner CFO John Martin cut to the chase when he told analysts during their most recent earnings call that Google wants them to either spin off AOL as a separate company or buy back their 5.5% stake.

Now, it could be that Google is a) posturing for a larger role over AOL services (like taking over their search), and/or b) introducing leverage before Time Warner and Yahoo! get too chummy over AOL.  But one thing is certain, a $700m write down is impossible to ignore these days, even among friends.