After officially announcing that AOL was going to be spun off yesterday, Tim Armstrong, the CEO of the Time (TWX) Warner online unit, held an all-hands meeting for employees today.

BoomTown reported the details of the new structure of AOL yesterday, which Armstrong discussed at the gathering.

Here is a quick synopsis of the meeting, which included a focus on content, advertising and making AOL’s acquisitions work better via a new venture unit.

Several employees I spoke to said Armstrong–who was a former top Google (GOOG) advertising exec, which–not surprisingly–seems to be a strong influence on him–did a good job.

Staffers said they were glad for the vision that Armstrong displayed, which some at the company think has been lacking in recent years.

Here’s a rundown of several key points:

The Google-ization of advertising: AOL’s Platform-A, including its valuable Advertising.com unit, will focus on many more customers, rather than a few big ones.

That includes having more of a self-service model, more like Google.

Content is king: Armstrong stressed content, which comes from AOL’s MediaGlow content unit, run by Bill Wilson.

Content will be a key focus at AOL, which has been investing heavily in media sites over the last several years.

Sink-or-swim start-ups: AOL’s acquisitions–such as the overpriced Bebo social networking unit–have to live and die on their own in a new AOL Ventures Group.

Some will be spun out and some will be sold, but all have to survive by their wits.

Internet company values: Compensation, which has been hindered by Time Warner’s ownership, will be based on how Web companies compensate.

That means stock options and equity, but also more risk and innovation on the part of employees.

The game of executive musical chairs among Web companies keeps on going, with sources telling BoomTown that AOL ad head Lynda Clarizio will be departing the online service and replaced by former high-ranking Yahoo ad exec Greg Coleman (pictured here).

Last week, this column first reported on former Yahoo media head Scott Moore taking a similar content job at Microsoft (MSFT), which had been vacated by Jeff Dossett, who took Moore’s job at Yahoo.

The less confusing move at AOL, with Coleman taking over for Clarizio and which has been in the works for only a week, could be announced as early as today, although I have been hearing rumors of such a development since late last week.

Clarizio has been head of Platform-A, the overall name for AOL’s advertising business, which includes a lot of various online ad companies AOL has bought in recent years.

She had been running AOL’s Advertising.com in Baltimore before being tapped to integrate them better over the last year, after a series of ad execs shuffled in and out of AOL.

But, said several sources, as a former AOL lawyer and dealmaker, Clarizio (pictured here) is not regarded by top execs the kind of nitty-gritty sales exec that AOL needs now, as it seeks to revive its fortunes.

AOL’s ad business has lagged badly of late, with owner Time Warner (TWX) pre-announcing that the online service’s results would be particularly weak this quarter. Time Warner reports quarterly earnings tomorrow.

Since a much-chewed-over possible merger with Yahoo (YHOO) has been put on ice, with the recent arrival of new CEO Carol Bartz, Time Warner and AOL execs have decided to focus on strengthening the online service and making much needed changes.

AOL recently announced a 10 percent layoff of its staff of 7,000, part of the rightsizing that has been going on.

And its valuation was also recently written down by Google (GOOG), to $5.5 billion from $20 billion several years ago.

AOL had already been in the midst of renovating its communications and social-networking assets under a new division called People Networks, which is run by former Bebo head Joanna Shields.

Its content arm has also gotten a different blog-centered direction and name–MediaGlow–under Bill Wilson.

Now, it’s apparently time for the ad leg of AOL’s three-pronged new strategy its future business is resting on to be fixed.

The hiring of Coleman came suddenly, said several sources. He had been considering a top job at another well-known online company and also was planning to move to a start-up he has been running to the Silicon Valley area.

He was hired by AOL CEO Randy Falco, whom Coleman has known for a long time, only last week, after Falco heard that Coleman was considering other positions.

Sources at Yahoo said the hiring had to be cleared by the company and Bartz, at Time Warner CEO Jeff Bewkes’s request, due to competitive issues.

Coleman is indeed an experienced online ad exec, who was at Yahoo for seven years, responsible for all advertising revenues worldwide. He came to Yahoo from Reader’s Digest.

But Coleman ran into Yahoo’s management buzzsaw after trouble hit the company in 2007. He was one of the first in a long line of execs to leave the troubled company, departing in one of its many controversial reorganizations.

But Yahoo’s ad business did grow strongly under him and former Yahoo ad exec Wenda Millard. She was also pushed out of Yahoo and now is Co-CEO of Martha Stewart Living Omnimedia.

Since then, Coleman has been running a Los Angeles-based start-up called NetSeer, which focuses on ad targeting.

Given his media background, Coleman is likely to be key to expanding premium branded advertising display sales across AOL’s advertising and programming networks.

He will move to New York and report to AOL President and COO Ron Grant, said sources, although Platform-A has key offices in Baltimore and San Francisco too.

Here is the letter AOL CEO Randy Falco (pictured here) has penned to the entire staff about layoffs of 10 percent of its workforce–or 700 people–and other cost cuts, which the online service is announcing today.

“We’re at a pivotal point in AOL’s transformation, and need to be even more strategically focused and operationally efficient as we weather the economic storm,” wrote Falco, in part, about the move.

As BoomTown reported earlier today, Time Warner (TWX) online unit AOL is making huge staff cuts, due to the weak economy and the ensuing deep falloff in advertising revenue, but also because of recent structural changes made to refocus the once-mighty service.

The layoffs will take place over the next several quarters, with most of the U.S. cuts to be completed by March. AOL has 7,000 employees world-wide, with most located domestically.

Here’s Falco’s letter:

Dear AOL colleagues,

I’m writing to tell you about some important decisions we’ve made about AOL’s business and why we’ve made them.

The deepening economic recession has affected every corner of the economy, including our own. Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars.

As a result, we will be reviewing our entire organization to further align resources and expenses against the real revenue opportunities in this difficult market. Part of this will involve consolidating groups to gain efficiencies that will unfortunately lead to head-count reductions. We anticipate this will result in a net reduction of our workforce of up to 10% over the next several quarters–and we will attempt to finalize all domestic actions by the end of March. Reducing our workforce is never easy, particularly in the current climate, but our goal in doing this is to provide our core businesses the resources they need to thrive. Please know that, as always, we’ll be doing everything we can to help and support those affected, including offering severance packages and other services.

To further keep employment costs down, we will also forgo merit pay increases in 2009. This is a painful decision, but one that many companies have prudently taken to help minimize the number of layoffs they have to make.

To provide some perspective on these decisions, right now we’re two years into a three-year turnaround plan. Since day one, our strategy has focused on building and growing mutually dependent publishing, advertising and social media businesses to take advantage of the shifting media landscape. We’ve worked shoulder-to-shoulder to make considerable progress during this time.

We acquired best-in-class companies across the digital advertising space (AdTech, Third Screen Media, Lightningcast, buy.at, TACODA and Quigo, respectively) and integrated them with Advertising.com to build Platform-A, the largest, smartest display advertising platform in the world.

We grew our MediaGlow audience via an efficient content development model that in 2008 enabled us to launch more than 20 new sites that are generating significant page view (up 64% year over year in December), engagement (up 39% year over year) and unduplicated user (70+ million) numbers. This momentum will continue in 2009 with our goal of creating an additional 30+ editorially curated sites focused on consumer passion points.

We combined Bebo with our longtime community assets AIM and ICQ as well as newer acquisitions Goowy, Yedda and SocialThing, to build People Networks, gaining AOL a foothold in the critical social media space, with more announcements to come on the next phase of development in both the social media space and in the integration of social and publishing capabilities.

This progress continues to put AOL in a strong position to capitalize on our new business model when the recession ends.

In addition to focusing our investments, a successful turnaround plan also requires us to realign our cost structure against this three-pronged business model–making difficult decisions to cut costs in areas that aren’t critical to our growth. Splitting out the Access business improved the transparency of what’s working and what’s not, and allowed us to make better decisions about exiting businesses that weren’t performing while investing in growth areas. A successful turnaround plan also mandates we control costs, operate with healthy margins and position the company for sustainable growth. As you know, we’ve moved repeatedly to bring discretionary expenses in line to spare across-the-board job cuts.

But we’ve also had to make many hard decisions along the way. And this moment is no exception. We’re at a pivotal point in AOL’s transformation, and need to be even more strategically focused and operationally efficient as we weather the economic storm.

In addition to the head-count reductions and the 2009 merit pay decision, we are also making changes throughout the organization to improve efficiency and better align it to our three core businesses. This includes a review of our international operations and our global shared-services functions. In addition, we will continue throughout the year to carefully and thoroughly review all our products and services to make sure every one fully supports our strategy and has the potential for growth.

Finally, we are going to realize significant savings by continuing to consolidate our facilities–for example, moving from two buildings to one in Mountain View, from two floors to one in Los Angeles, and leasing unused space on our Dulles campus.

With these and other changes, we will take significant annual run-rate costs out of our business while, importantly, retaining the flexibility to invest in our growth strategy.

I know all this will raise questions, but I wanted to share as much as I could with you now. Senior management will provide more details as appropriate to their teams in the weeks ahead.

As difficult as things look right now, the economy eventually will turn around. Some companies will use this time prudently and make difficult decisions to come out of it in better shape–growing toward areas of opportunity, scaling back in others and maintaining a line on costs all around. Our only choice is to be one of these companies. With your continued hard work and dedication, we will position ourselves to emerge a stronger company ready to lead in a vibrant online market.

Randy

As has been copiously reported here and all over, Yahoo and AOL have been engaged in never-ending talks about a possible deal to merge their flagging Internet businesses.

Now, sources tell me, the circle of executives at both companies interfacing with each other has been widened, for purposes of due diligence.

That chit-chatting includes Yahoo CEO Jerry Yang, who has been in New York several times recently [UPDATE: But not yesterday, in a story I had previously linked to here]–where AOL parent, Time Warner, is located–to meet once with its CEO, Jeff Bewkes, and see if they can actually complete the merger.

Now, all this frantic activity does not mean a deal will necessarily be struck. In fact, in typical Yahoo style, it is going very slowly and that is never a good thing in dealmaking.

But it is this kind of ramped-up blabbery that has many at both companies predicting–hoping, really–that a deal will go through, sooner or later, as soon as Time Warner and Yahoo can agree on a price.

Or, more precisely, a percentage, since Yahoo’s stock price has been falling like a particularly sharp knife of late.

Sources said Yahoo does not want Time Warner (TWX) to have any more than 25 percent of the new company in a trade for AOL’s assets–although that figure would be slightly more if the media giant throws in some of that “Harry Potter”-generated cash into the deal kitty.

Yahoo (YHOO) management, sources said, also think its assets are of significantly better quality than AOL’s, and it still has that powerful–although declining–share in the lucrative search market.

Thus, it does not want to pay the $8 to $10 billion price Time Warner wants, and it should not either. (Here is a good analysis on the price issue by Silicon Alley Insider’s Henry Blodget.)

But Yahoo shares closed yesterday at a troubling $14.58, down 73 cents, or almost five percent.

That means its market valuation also declined by many billion dollars very quickly. It is now at $20.2 billion.

These profound stock drops, said several sources, could spur Yahoo to act before it gets even worse, which is why talks have been more frequent in recent weeks.

While not the best state of mind, panic is always a good motivator, and both companies are surely desperate to turbocharge themselves in the face of tough competition and avoidable management mishaps in recent years.

The hope? That together the pair can do better than they have separately–by combining their advertising, content and communications assets, which are among the largest in the world.

In addition, the “new” Yahoo would be able to make massive cost cuts, including layoffs, under the cover of integration and starting off with a clean slate.

So who would emerge more powerful in a new set-up–AOL or Yahoo?

Here’s a short cheat list:

Content:

AOL and Yahoo have a similar range of content assets, with big sites in all the classic categories, like news, financial, sports and lifestyles. Yahoo’s content head is Scott Moore, while AOL’s is Bill Wilson (both pictured here, left to right).

As I wrote yesterday, I expect that the more dominant Yahoo will rule, slashing and burning most of the AOL-branded properties, keeping only interesting newer brands like sports blog FanHouse, celeb blog TMZ and the Engadget, Tuaw and JoyStiq tech blogs.

And while former Microsoftie Moore is the likely head of this behemoth, don’t count on the very adept Wilson, who is known as a skilled corporate player at AOL, to stick around without a big role in this arena.

Communications:

Again, advantage Yahoo, which has bigger calendaring, email and instant messaging assets, an area once overwhelmingly dominated by AOL. That was then, of course.

Still, AOL’s communications tools are used by a huge audience worldwide and the pair together would be a powerhouse. So much so, in fact, that this might be the one major regulatory hurdle any deal would face.

Advertising:

Again, Yahoo would probably dominate, having just hired well-known former Microsoft exec Joanne Bradford to head up U.S. advertising sales. AOL’s top ad exec is Lynda Clarizio, a former lawyer who is considered dogged but much less experienced than Bradford. (Both are pictured here, right to left.)

And, Yahoo does have its search ad business, however weakening, and a stronger graphical ad business, even if the sector will be most under siege in the current down economy.

Plus, AOL’s Advertising.com, while a major ad network, is more of a business subject to bruising competition and squeezed margins.

Community:

Tapan Bhat (pictured here) now rules community at Yahoo, as well as its homepage, having just inherited it from the departing Brad Garlinghouse.

But AOL has a savvy and voluble exec in Joanna Shields, who came recently via its Bebo social-networking acquisition. While AOL woefully overpaid for Bebo and got played into thinking that other bidders were more interested than they actually were, it was Shields (pictured here) who essentially did that playing.

Sign her up for a top exec role in the combined company pronto!

In all seriousness, there is room for both in the newco, as both AOL and Yahoo seriously bite in the social-networking space. They will surely need a lot more than Bhat and Shields if they want to become true players in Web 2.0′s hottest and probably most important trend.

Engineering:

Yahoo. I do not need to explain this, do I?

Okay: AOL has always been incompetent in the technical arena, since its beginning days, compared with Silicon Valley companies like Yahoo.

All yours, Ash Patel!

Management:

Now, it is here that it gets interesting.

Most feel the push by Yang to do an AOL deal–and make no mistake, it is being pushed by him most of all–is due to increased pressure from his board, as well as major investors, who have had just about enough of his leadership.

“There is no way Jerry stays on as CEO in a newco,” said one source about Yang (pictured here). “He’ll be kicked upstairs as chairman, and I will think [President Sue] Decker will also have to go eventually, since there will be a lot of resistance if she is named CEO.”

But, said other sources, these major management changes will not happen immediately, if at all, as it is too distracting in the wake of a deal and ruins the positive “story” that both companies will surely want to spin.

And spin they will! (Go, Tricia! Go, Jill!)

And while he has a reputation for sharkish political skills, especially compared to Yahoo’s very diplomatic U.S. head, Hilary Schneider, expect AOL President Ron Grant to be an important part of the transition, since he is good–almost too good–at cutting costs.

Most expect his boss, AOL CEO Randy Falco, not to be part of the new company, thereby separating him and Grant, who are nicknamed “Smithers and Burns” at AOL, after “The Simpsons” creepy duo.

Most likely, there will be a search for a top-level CEO to take over the combined company–someone of the stature of New Corp.’s No. 2 Peter Chernin or eBay’s former leader Meg Whitman (except now, she is apparently Sen. John McCain’s pick for Treasury Secretary, if the Republican Presidential candidate were to win the election).

“If this has any chance of working out, the board has to push restart on the leadership,” said one person close to the situation, who notes that this deal is Yang’s last chance to truly impact the future of the company he co-founded and preserve its legacy. “Everyone gets that, even Jerry.”

But I think the idea that Yang would leave if there were to be a merger of Yahoo with AOL is wishful thinking on the part of his critics.

He appears tome to be very committed to seeing his vision of turning around Yahoo through.

And those who have counted him out always seem to be the ones who have been typically wrong, such as Microsoft CEO Steve Ballmer and shareholder activist Carl Icahn.

Because, for all the turmoil at Yahoo, it’s Yang still calling the shots.

The reason is a noncompete Miller (pictured here) signed, part of a severance agreement he reached with the media giant after it unceremoniously tossed him out in late 2006.

A Time Warner spokesman said Miller was barred from working “for a variety of competitors, including Yahoo, until March of 2009.”

Like it matters.

According to sources at Time Warner (TWX), the decision came from on high at corporate and not from the AOL unit. And it is not due to jealousy over attention Miller has received of late–Microsoft was also interested in hiring him to take over for departing exec Kevin Johnson.

Miller, sources said, was called by Time Warner CEO Jeff Bewkes (pictured here) last night and told by him, “We’ve changed our mind.”

Why?

Well, to be sure, Miller is no Time Warner favorite, even after being gone for almost two years.

But Miller, whom Time Warner and AOL execs never miss an opportunity to bash, off the record, is also no threat to AOL, which he actually helped revive from the ruins of the disastrous AOL-Time Warner merger.

While working on my second book about AOL in 2002, I will always remember visiting Miller at AOL HQ in Dulles, Va.–where he took up residence in former AOL exec Bob Pittman’s office–and finding him unusually calm after he got the thankless job of following Pittman and AOL icon Steve Case.

Time Warner forces, in the form of new CEO Dick Parsons, had finally managed to take back control of the company and–in a fit of misguided pique–brought holy hell down on the AOL unit.

It was a profoundly emotional reaction, which cost Time Warner precious years and much, much money, as the Internet business revived itself and AOL largely sat on the sidelines.

Miller was in the unenviable position of cleaning up the mess, while also having to listen to endless griping from his bosses.

And, despite the line being put out by Time Warner, he did a pretty good job.

While he might have dumped the dial-up business sooner and been more of an organized manager (the two big complaints about him), Miller did strike AOL’s lucrative Google search ad deal and also bought Advertising.com. (He also tried to buy YouTube, to no avail.)

That purchase should be reason enough for Time Warner to erect a small altar to him, given that it is one of AOL’s only truly valuable assets and the reason Microsoft (MSFT) and Yahoo (YHOO) have been interested in possibly buying the unit.

But no.

Instead, there is the usual he-said-she-said wrangling about whether Miller got approval for being let out of the noncompete clause.

Time Warner apparently claims Miller never got an official waiver, and Miller forces say Bewkes okayed the issue weeks ago, when it was first announced that Miller was one of the board picks being put forth by activist investor Carl Icahn.

It defies belief to go with Time Warner version, given everyone and their mother’s mother knew Miller was the likely pick of both Icahn and, especially, Yahoo CEO Jerry Yang.

More interesting is why Time Warner would choose to speak now, especially on the day of Yahoo’s board meeting.

At the meeting, the Yahoo board approved expanding its number of directors from 9 to 11 and formally voted to let Icahn take over the seat being vacated by Robert Kotick.

Miller was the shoo-in, with other likely choices. including former Nextel (S) exec John Chapple, media exec Frank Biondi and former Grey Global Advertising head Edward Meyer.

Perhaps Bewkes imagines somehow that Miller will be a leverage point in talks Time Warner has been having with Yahoo to be acquired. But the smooth exec is an expert negotiator and that seems unlikely.

More likely is that those talks, like AOL’s talks with Microsoft, have gone a little cold of late as everyone shuts up and stops making ill-conceived moves, to show Wall Street that they have their forward-leaning Internet strategies figured out.

No one does. Not Yahoo. Not Microsoft. And, most definitely, not Time Warner’s AOL.

That’s why Bewkes should stop the saber-rattling and free Miller to serve on the Yahoo board.

Yahoo could benefit and, as it stands now, Time Warner just looks silly–it does not want Miller, but it doesn’t want anyone else to have him.

My three-year-old knows how to share better than that.

Everybody remain calm.

While it might have looked like it was the rapture for major Internet players yesterday–what with everyone and his mother getting sucked up into the Yahoo-Microsoft takeover tussle and disappearing into the ether of confusion that now reigns over the situation–it is best to keep moving toward the light of harsh reality for illumination.

And the reality in three parts, addressing the trifecta of big news yesterday, is:

I DO NOT LIKE MONOPOLIES, I DO NOT LIKE THEM, JERRY-I-AM

Google (GOOG) and Yahoo (YHOO) will not and, more importantly, cannot make any significant search-ad deal in any way longer than the two-week test they announced to terrific fanfare yesterday.

It is a regulatory no-no of such an obvious nature, that Microsoft (MSFT) has to prove almost nothing to win on the merits of the fact that Google dominates the arena with such power that it cannot be linked with anyone else.

But it is a nice image of one Silicon Valley company coming to the rescue of another, helping to show how Yahoo could be better monetized and, therefore, be worth more.

(Although irony-alert: Outside of Yahoo’s own self-inflicted wounds, it is Google that is most responsible for knocking Yahoo’s teeth out in the search and search ad game.)

So, any further hook-up between the two seems sure to become the Justice Department Lawyer Employment Act of 2008, the likes of which we have not seen since Microsoft got its turn at being deservedly whacked for being a monopolist back in the last century.

Let’s face it, outside of those who cannot seem to shake the annoying Kumbaya mentality over at Google, a Yahoo-Google partnership is simply fantastical, like some out-of-control Dr. Seuss ditty.

They could not, would not with a goat. They would not, could not on a boat. They will not share an algorithm, they will not, will not, Jerry-I-Am.

TROUBLE AHEAD, TROUBLE BEHIND

In a post I did just before the heating up of the AOL-Yahoo talks was reported yesterday, I had written:

“Yahoo is still ferreting away with execs from Time Warner and its AOL unit–you know, that rat’s-nest of a deal in which AOL, Time Warner investment dollars and, oh, some old fishing rod of former exec Don Logan’s is thrown into Yahoo for a 20% stake, along with perhaps a dollop of Google involvement for added complexity.”

And, maybe it is just me, or–except for the fine fishing rod–is anyone else a little worried about the potential disaster of an AOL-Yahoo mashup?

As someone who wrote two–count ‘em, two!–books on AOL, including a very detailed narrative of the horrific AOL merger with Time Warner (TWX) a few years back, a union from which both sides have never adequately recovered, I am plenty worried.

From a Time Warner perspective, I get it. It allows the company to unload the lodestone of AOL from around its neck and finally give it some value.

I might point out that Time Warner had ample opportunity to so do over the years (more on that, tomorrow!).

And its inability to make much of the online unit must be disappointing to its new CEO Jeff Bewkes, who hated the original AOL merger more than most.

While Time Warner and AOL like to point to the success of Advertising.com, and there are some various bright spots here and there (Truveo, TMZ, Userplane), its online ad business is still not dominant enough and other parts woefully behind the efforts of others.

And its recent $850 million cash purchase of the very nice, but distant-third Bebo social-networking site reeked of desperation rather than the aspiration it was meant to be. With MySpace and Facebook battling for the big numbers, only help from a large traffic site like Yahoo might work.

That’s not to say that some of its deeply underutilized assets, like AIM, would not be a good add to Yahoo. But the benefit to Yahoo–except as a way to try to escape from or shake down Microsoft for more money–seems negligible.

Lastly, given that it would be a stock transaction without the need for a shareholder vote, I cannot imagine that a large number of them would not freak out at the uncertainty of an AOL-Yahoo merger versus a solid number from Microsoft.

RUPE-A-DOPE

How jaw-dropping are the rascally wiles of Rupert Murdoch of News Corp. (owner of this site)?

First, he cozies up to Yahoo CEO Jerry Yang like a White Knight, but gets caught up in the fact that Yahoo does not want him to have too much power.

Then, Murdoch heads on up to Redmond to play footsie with Microsoft CEO Steve Ballmer, intrigued by the possibility of offloading MySpace and getting a better trade for it.

You just know he’s going to end up with the whole thing and Yang and Ballmer will be left scratching their heads over what just happened.

But, seriously, I am not entirely clear why Microsoft is also adding this level of complexity, even if it would give it a partner to add more money and assets to the deal.

I get the addition of MySpace might be nice. And so would some investment dollars from News Corp. (NWS).

And, most of all, I see how delicious it might be for Microsoft to be able to fire Google as News Corp.’s ad partner for MySpace (a firing, I suspect, Google might actually welcome, given its public complaints about the difficulty of monetizing social networking).

But I am not sure why Microsoft won’t just man-up and fork over a few more dollars to its original offer, which would end this circus pretty quickly.

My guess is that the deal-making fervor has gone to its head and it cannot just be seen as giving in to Yahoo’s exertions to show it really, truly could be worth more.

Ballmer should just deliver that need from Yahoo and do the deal.

And, for good measure, he might just consult Proverbs 16:18: “Pride goes before destruction, a haughty spirit before a fall.”

GETTING READY FOR THE RAPTURE

Finally, for those who want to rock out on the rapture, here is singer-songwriter Jill Sobule, singing about it onstage at D5 last May:

Please see this disclosure related to me and Google.

After its AOL division paid out an insane $850 million for social-networking site Bebo yesterday, one had to wonder if the true digital legacy of Time Warner (TWX) will be as the perpetual gravy train for legions of Web players.

It certainly seems that way, from the original AOL execs who “merged” their company with Time Warner in 2000 and cashed out at the peak right after the deal to the series of ad-networking start-up entrepreneurs who got acquired, took their payouts and skedaddled right on through to the two founders of Bebo–Michael and Xochi Birch–who didn’t even stay long enough for a latte after grabbing their chunk of the payday Time Warner was handing out in crisp bank notes for the social-networking site they founded.

And, more importantly, after one digital misstep after the next dating back to its Pathfinder days–which I have likened to watching someone fall down an endless staircase–one also has to wonder if Time Warner will ever see any of the upside of the Internet itself.

I remain dubious.

And after interviewing numerous sources close to the company yesterday after the Bebo deal was announced, I am even more certain of more trouble ahead.

Here’s why:

1. While I have always admired Bebo for its innovation and cool ideas about content (I love its “KateModern” online series, as you can see here), AOL essentially just forked over all that money for an audience of primarily teenagers in England, which is Bebo’s biggest market by far (but where Facebook has pulled to No. 1 in a year).

And while Bebo execs would argue with me about this, especially since international aspirations were touted by AOL yesterday, it has no more international traction than much more powerful leaders Facebook and MySpace. More significantly, its size in the important U.S. market, which is hoped will be helped by a marketing boost from AOL, is small and further traction remains questionable.

To be fair, AOL also touted the high engagement levels, which Bebo does have in terms of both minutes and page view per user.

2. Sources close to the company say AOL CEO Randy Falco and President Ron Grant–who are none-too-lovingly called Burns and Smithers at AOL–kept the deal a relative secret from most other execs, including those who might be majorly impacted.

It is not abnormal for acquisitions to be done in a tight group, but was apparently excessive in this case, and reminds one of the sneakiness of former Time Warner CEO Jerry Levin in the troubled AOL merger.

3. Sources said Falco had repeatedly told execs at AOL that he had to do a “big property” acquisition to move the needle, which has not been exactly moving at the unit of late, in order to show Wall Street that AOL had a social-networking strategy. “It’s like constantly scrambling eggs, by doing big new moves, you can hide the problems,” said one exec.

4. The turmoil in its online advertising unit, dubbed Platform A back in the fall, is real and profound and extraordinarily troublesome, given that it is supposed to be the engine to make the Bebo financial projections work at AOL. As I wrote earlier, Bebo needs that jump-start given its small revenues and profits.

The recent departure of three of the key executives who were supposed to be part of Platform A’s success–VP of Marketing Solutions Kathy Kayse and EVP for Global Advertising Strategy Dave Morgan in February, as well as Platform A President Curt Viebranz last week–is worrisome, even though it has been floated by AOL as a housecleaning.

But, curiously, all get good marks for competence from many and had, in fact, been recently touted as saviors by AOL. They do share one thing in common, said several sources: Run-ins with Grant, over cuts in spending and disagreement over aggressive sales projections in a recessionary economy.

In addition, all the key execs from its Tacoda acquisition are gone, along with those from its Quigo buy.

And, while its Advertising.com top exec Lynda Clarizio has taken over Platform A and is considered a strong exec and a “go-getter,” many sources told me she also reportedly had similar testy run-ins with Grant, before he recently was quoted on her promotion: “There is no one better qualified to do this than Lynda, whose track record at Advertising.com has been nothing short of stellar.”

While corporate departures and infighting are also common at many companies, especially over budgets and performance expectations, the level of rancor at AOL has been high.

5. Perhaps most importantly, it remains a mystery to me and many others I talked to yesterday that AOL has not truly attempted to take its very powerful properties like AIM and ICQ and make them more social, building applications on top of already robust ones and partnering around the Web.

“Didn’t AOL invent the social graph with Buddy Lists?” said one perplexed Silicon Valley luminary to me. Yes, indeedy, it did.

Thus, I am still trying to figure out why AOL–which was built on the pillars of community, communications and connectivity–has consistently not been able to leverage its still-valuable assets.

I suppose it is sexier to do a big, splashy deal, of course, which takes focus away–for a while at least–of the essential need to take hits, while doing the slow block-and-tackle work it will require to really build a strong ad and social network.

Buying Bebo, the third-ranked social network, for so much and trying to turbocharge it is a very lofty goal, of course, but the real problem with the acquisition is that it feels like an answer in search of a question.

While Bebo President Joanna Shields–who will enter the AOL exec team as part of the deal–and the Birches have clearly built a very interesting property, the weight of Falco’s calling it a “game-changer” on which AOL’s future rides could turn out to be much too much for Bebo to carry.

That is, especially with that heavy bag of Time Warner cash it is also shouldering.