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The AOL logo is seen on the outside of the building housing the companies corporate headquarters in New York May 28, 2009.
Credit: Reuters/Lucas Jackson
NEW YORK |
Thu Aug 11, 2011 1:57pm EDT
NEW YORK (Reuters) - AOL said on Thursday it would buy back $250 million of its stock, a move presumably intended to boost confidence in the shares, which fell 32 percent in two days.
After the announcement, the shares rose as much 22 percent.
The drop had wiped out $518 million in value, since the company reported second-quarter results on Tuesday that missed profit expectations amid weak advertising growth.
AOL Chief Executive Tim Armstrong said during a call with analysts on Tuesday that a buyback was under consideration but that the company would likely concentrate on growth.
"I believe the stock is undervalued, and I think our operational results will be the fastest way for us to bring the value of the stock up."
AOL has been in a turnaround mode since it was spun off from Time Warner in December 2009 after one of the most disastrous mergers in recent times.
The company is attempting to reshape itself into an online media and entertainment powerhouse with a growing dependence on advertising revenue as its lucrative subscription dollars from its dial-up business melts away.
AOL has had several shake-ups over the course of Armstrong's leadership, including the July ouster of its top advertising executive, one-time Google executive Jeff Levick.
It reported that second-quarter advertising revenue rose 5 percent, but analysts were expecting bigger gains in display ad revenue. The slow growth suggested rivals like Google and Facebook are taking share.
AOL's board said the company plans to repurchase shares over the next 12 months.
Shares of AOL were up 13.6 percent at $11.61 in afternoon trade on Thursday on the New York Stock Exchange.
(Reporting by Jennifer Saba; Editing by Steve Orlofsky)
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We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (2)
socratesfoot wrote:
The only way AOL will succeed is to change it’s name. there are too many that associate it with greed and corruption.
Aug 11, 2011 11:14am EDT -- Report as abuse
Ocala123456789 wrote:
this company is dead since DSL invented… kill this disastrous firm
Aug 11, 2011 12:55pm EDT -- Report as abuse
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