AOL, Inc. : Starboard Files Detailed Investor Presentation On AOL Inc.
05/24/2012| 08:15am US/Eastern
NEW YORK, May 24, 2012 /PRNewswire/ -- Starboard Value LP (together with its affiliates, "Starboard"), one of the largest shareholders of AOL Inc. ("AOL" or the "Company") (NYSE: AOL) with current ownership of approximately 5.3% of the outstanding shares, announced that it filed an investor presentation yesterday with the Securities and Exchange Commission ("SEC") in connection with the 2012 Annual Meeting scheduled to be held on June 14, 2012. http://tinyurl.com/StarboardInvestorPresentation
Starboard is urging shareholders to vote the GOLD proxy card to elect its three highly qualified nominees, Dennis A. Miller, Jeffrey C. Smith, and James A. Warner, in place of incumbent directors Alberto Ibarguen, Patricia Mitchell, and James Stengel, at the Annual Meeting.
The investor presentation is available at the SEC's website and can be viewed by clicking the following link: http://tinyurl.com/StarboardInvestorPresentation
Highlights of the presentation include:
-- Starboard's involvement in AOL over the past 6 months has been
constructive and has yielded positive benefits for all shareholders.
-- Prior to Starboard's involvement with AOL, the Company and its
shareholders had suffered through poor operating and stock price
performance since the spin-off from Time Warner.
-- During this period, revenues declined twice as fast as operating
expenses and EBITDA margins deteriorated significantly.
-- Since Starboard's first public letter in December 2011, AOL's stock
price has significantly outperformed both the market and its peers.
-- Starboard believes this recent increase in AOL's stock price is in
large part attributable to Starboard's involvement with AOL, the
recent actions taken in response to Starboard's involvement, and
Starboard's plans to continue to significantly increase value at
-- The Company's reactive changes to date, while a step in the right
direction, have largely failed to address the serious operational issues
facing the Company.
-- According to Starboard's analysis and confirmed by recent reports
from Wall Street research analysts who cover AOL, the Display
business lost more than $500 million last year alone.
-- This business has over $500 million in revenue and, Starboard
believes, could be operated profitably if operated more efficiently.
-- From 2009 to 2011, AOL spent approximately $900 million on
acquisitions and investments to grow its Display advertising
business, yet enterprise value declined by 59% or $1.7 billion over
-- The Display advertising business has not been improving, with an
organic revenue decline of 13% from 2009 to 2011, and losses that
Starboard believes have increased from $428 million in 2009 to $545
million in 2011(1).
-- Starboard believes its analysis of Patch, which includes a comprehensive
study conducted by an independent business strategy consulting firm,
demonstrates that Patch is not a viable business.
-- Even at AOL's target revenue model of selling 80% of ad slots to
local advertisers near rate card pricing, Starboard estimates that
Patch would still lose approximately $20 million to $60 million per
-- AOL's recently issued revenue guidance of $40-50 million per year in
Patch is not satisfactory.
-- At a revenue run rate of $40-50 million per year, Starboard
estimates that Patch would still lose approximately $79 million
to $133 million per year.
-- AOL appears to be pushing ads to Patch that could have been used on
other AOL properties to inflate Patch revenue and justify continued
-- Leading independent proxy advisory firms have also expressed serious
concerns with AOL's Peer Group selection and compensation practices.
-- AOL has consistently compared itself to some of the world's largest
companies, many of which seem to not only be outside of the range
recommended by these leading independent proxy advisory firms, but
also appear not to be comparable businesses.
-- Starboard believes determining the right peer group is critical
because it represents the foundation upon which compensation
planning and relative performance is measured.
-- Starboard agrees with the assertion by a leading proxy advisory firm
that "Shareholders need to be satisfied that the peer group is
appropriate and not cherry-picked for the purpose of justifying or
-- Starboard's nominees are highly qualified and have a better plan for
enhancing shareholder value.
-- Dennis Miller, Jeffrey Smith, and James Warner have strong, relevant
experience and are committed to representing the best interests of
all AOL shareholders
-- Starboard's nominees are committed to working constructively with
management and the board to substantially improve the profitability
of AOL's Display business including a re-assessment of Patch, which,
Starboard believes, is losing approximately $150 million per year.
-- Starboard's nominees would seek opportunities for value creation by
exploring alternatives for certain of the AOL's assets, including
its remaining intellectual property portfolio, its real estate, and
capital structure efficiencies.
The full Investor Presentation is available for viewing at: http://tinyurl.com/StarboardInvestorPresentation
About Starboard Value LP
Starboard Value LP is a New York-based investment adviser with a focused and differentiated fundamental approach to investing in publicly traded U.S. small cap companies. Starboard invests in deeply undervalued small cap companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.
Peter Feld, (212) 201-4878
Gavin Molinelli, (212) 201-4828
Sard Verbinnen & Co.
If you have any questions, require assistance with submitting your GOLD proxy card or need additional copies of the proxy materials, please contact:
Bruce H. Goldfarb / Patrick McHugh
(877) 869-0171 (toll-free)
(1) Display revenue figures from Company filings. Disaggregated Display losses are based on Starboard Value estimates derived from assumptions including EBITDA margins of 80% for the Access business, 73% for Search, 5.5% for Advertising Network, and 10% for the Company's Other businesses. These values are derived from conversations with the Company, competitors, Wall Street research analysts, and Starboard Value internal estimates.
SOURCE Starboard Value LP