Kara Swisher

Recent Posts by Kara Swisher

Why Are AOL Shares Up Today? Maybe for Admitting Bebo Is a Total Bust?

AOL shares pushed higher today than they have been since its November spinoff, rising almost four percent to close at $27.44.

And the reason for the rise? One savvy investor suggested it was due to yesterday’s announcement that the company might shut down Bebo, the social networking site it egregiously overpaid for in 2008–$850 million in cash–only to see the asset dwindle badly.

Rather than finding a buyer, said the investor, a shutdown might allow AOL (AOL) to write down some of that acquisition, yielding it hundreds of millions of dollars in tax savings.

AOL bought Bebo in 2008, when it was still a Time Warner (TWX) division.

In addition, AOL is in the midst of selling off its ICQ instant-messaging business–likely to foreign buyers, in one of the slowest transactions ever. Once that deal is done, it could nab the company upward of $100 million to $150 million in cash.

With its current cash flow, that could give CEO Tim Armstrong a nice pile of dough, which could be further supplemented as he gears up for negotiations over a new deal for AOL’s search business with both Google (GOOG)–its current partner–and Microsoft (MSFT).

While the big-money guarantees are likely a thing of the past, AOL’s business–unlike, say, MySpace’s–is considered valuable by both companies. The current Google deal is up in December.

In any case, while the failure of translating its Bebo acquisition into any kind of success is pretty clear, perhaps the complete disaster does have some silver lining.

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The problem with the Billionaire Savior phase of the newspaper collapse has always been that billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo.

— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald