AOL splits off ailing dial-up service

7 Feb 2008

AOL was and to a degree still remains a force to be reckoned with in the wider web world but as its advertising business grows, its ageing business dial-up service seems to be hindering progress, something that Time Warner CEO Jeff Bewkes addressed yesterday by splitting AOL down the middle.

In its heyday back in 2000, AOL was the leading web portal and ISP provider. It was a time when the company was powerful enough to acquire old media giant Time Warner for a staggering US$164bn.

It is a different story in 2008 as the company reported fourth-quarter revenues have fallen by 32pc since this time last year to US$1.3bn. Dial-up customers at the end of 2007 numbered 9.3 million, 3.8 million less than the year before.

Before Microsoft publicly offered to buy Yahoo! on 1 February, it was thought that AOL’s advertising portal may have been an attractive proposition for either organisation as the company had been building up its advertising strength in the past few years with the acquisition of for US$435m in 2004.

While it may now seem unlikely that Microsoft or Yahoo! will make a play for AOL’s online advertising business, the highest bidder will be paying a lot considering Google owns a 5pc stake in the company, for which it paid US$1bn.

By Marie Boran