AOL has hired Evercore Partners to find a buyer for its more than 800 patents. The company is exploring the option as a revenue boost against slower ad sales and a decline in subscribers. AOL’s revenue has dropped 29% since its 2009 spinoff from Time Warner.
The internet giant has tapped Evercore Partners to find a buyer for its patents and explore other strategic options, according to Bloomberg.
Private-equity firms including Providence Equity Partners, TPG Capital and Silver Lake have approached AOL about taking the company private, but that didn’t materialize. This may be a better option.
Many of AOL’s patents cover Internet advertising and communications services, and the portfolio could fetch as much as $1 billion from a large technology company, Christopher Marlett, co-founder of MDB Capital Group told Bloomberg:
“More than likely the buyer on this would be someone like Google or Microsoft. AOL’s intellectual property could be a significant percentage of the overall value of the company.”
Private-equity firms are often drawn by a company’s ability to generate cash. AOL’s appeal is diminishing as its dial-up business keeps slowing. Sales in that division
amounted to $803 million, or 36% of total revenue in 2011. AOL’s Q4 net income dropped 65% from a year earlier to $22.8 million on sales of $576.8 million.
AOL’s portfolio includes “some of the foundation patents for the Internet,” AOL CEO Tim Armstrong said at a Barclays Capital conference this month: “It’s beachfront property in East Hampton. It’s basically extremely valuable.”