Peter Kafka

Recent Posts by Peter Kafka

Google: AOL Is Worth $5.5 Billion

Here’s an unpleasant bouquet for Time Warner CEO Jeff Bewkes from Google CEO Eric Schmidt: An accounting move that places the value of Time Warner’s AOL at $5.5 billion, at least for now.

The move comes via Google’s (GOOG) fourth-quarter earnings: The company said it had written down the value of the $1 billion investment it made in AOL three years ago by $726 million.

Given that Google’s 2005 investment gave it a five percent stake in AOL and valued the service at $20 billion, the write-down pegs AOL’s new value at about $5.5 billion.

This is no big deal for Google, which also wrote off $355 million of its investment in Clearwire, the wireless provider. The losses are on paper, and the company certainly wasn’t banking on the investments for financial purposes.

And Schmidt didn’t sound broken up about it on the company’s earnings call this afternoon: “Both deals made sense to us then and make sense to us now.”

But this can’t be positive for for Bewkes, who had been trying until recently to get something like $7 billion for AOL. It’s not clear that Time Warner (TWX) or anyone else–chiefly Yahoo (YHOO)–thought anyone would pay that much after the economy collapsed this fall.

But it’s one thing to think that, and another to see it in black and white.


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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus