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Does AOL's Huge Stock Decline Make It a Bargain Acquisition Target?

Kara Swisher — Thu, 11 Aug 2011 15:12:45 +0000

In the last month, the stock of AOL has declined just over 50 percent.

But that drop is not just due to the turbulent markets of late. AOL stock had a 50 percent drop over the last six months, a 57 percent decline since the beginning of the year, and a 56 percent plunge since it went public in late 2009.

Which is why some in the industry — at private equity firms and bigger companies — have noted to me that the price of AOL might have gotten low enough for a very cheap takeover.

“You have to look, even with all the problems they have been struggling to fix,” said one person, who also underscored the advertising and other challenges that AOL faces. “But it is so inexpensive, it’s also an interesting idea.”

Said another large investor: “It’s almost free, given its cash on hand.”

Indeed, since in its recent second-quarter earnings report, AOL said that, as of June 30, it has $458.7 million in cash.

That matters, since at $10.22 a share — a far cry from its $28.45 high of all time in late April of 2010 — the market valuation of the New York-based Internet giant is only $1.09 billion.

You do the math.

To give that number perspective, AOL paid out $315 million in cash to buy the Huffington Post in the beginning of this year. And, let us not forget, under different management, AOL forked over $850 million in cash to buy the Bebo social network in 2008, and sold it for a song last year.

Even AOL thinks the price is low, announcing a $250 million stock buyback program this morning, just as shares hit their lowest point ever yesterday.

The stock is up today, though still in the basement.

To be fair, comparable companies’ valuations have also taken a hit recently. Yahoo shares are down 29 percent since the beginning of the year, giving it an affordable $15.3 billion valuation; and Demand Media’s stock has dropped 63 percent in that period, making its current price tag only $703 million.

Calling all shoppers?

Online Coupons Get Smarter

Ian Sherr — Wed, 25 Aug 2010 19:33:59 +0000

When Jennifer London cut a deal with Groupon Inc. to promote her smoothie shop in an email, she wasn’t sure how many people would show up for discounted drinks.

Thirsty New Yorkers bought more than 1,300 of her online coupons, and “it kind of blew my mind,” Ms. London said. People redeemed roughly 900 of the coupons over six months at her small Xoom NYC Inc. shop, including a crush in June, but she was disappointed that few became regular customers.

“Most of the people who came are not from this neighborhood—I most likely won’t see them again,” Ms. London said, adding she wished she had limited each person to three coupons rather than 10. Fortunately, she said, not all the coupons were redeemed. “I definitely would have lost money if everyone had shown up,” she said.

Groupon and its competitors, which build buzz by sending out a daily email alerting subscribers in a city to a local bargain, are listening to gripes like Ms. London’s and recasting their operations. Among the new approaches: computer programs to better target consumers with personalized deals and staff on the ground to help merchants.

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Two Little Laptops With a Lot to Offer Their Core Users

Walter S. Mossberg — Thu, 04 Feb 2010 02:04:09 +0000

For all the talk about new tablet computers like Apple’s iPad, laptops remain the computer industry’s bread and butter, and smaller laptops are especially popular with consumers.

So, I’ve been testing two diminutive laptops, both with 11-inch screens, that show how clever engineering can take a familiar device and customize it for particular audiences. These two machines couldn’t be more different, and they are aimed at radically different customers. Neither is a bargain-priced netbook, but both were designed with compactness in mind.

[ See post to watch video ]

One of these products is from Dell’s Alienware group, which specializes in potent computers for hard-core gamers. The device is called the M11x, and it came out this week at a base price of $799. It’s an attempt to pack much of the power gamers typically tote around inside thicker, heavier laptops into a much more portable chassis. The M11x weighs about 4.4 pounds, which in the gaming world is svelte, and is about 1.3 inches thick.

The other machine I’ve been testing was released by Sony over the holiday shopping season with relatively little mass-market fanfare. It’s called the Vaio X, starts at $1,299 and is easily the lightest laptop I’ve ever reviewed.

In fact, it’s so light, at just 1.6 pounds, that at first I thought it must be a mock-up made of cardboard. The Vaio X is also just a tad over a half an inch thick. Its processor and graphics system are like a netbook’s, so it can’t come close to matching the Dell (DELL) in performance. But it isn’t meant for the performance market. It’s meant for highly mobile users who do typical computing, want to show off something sleek and can tolerate a high price and weak battery life in the standard configuration.

The M11x is a chunky box that, despite its size, is immediately recognizable as an Alienware product. The power button looks like a space alien’s face, and, along with the keyboard and some other features on the front edge, it can be made to light up and pulse in a variety of bright colors.

Inside, it sports dual graphics systems—one powerful discrete graphics card for heavy-duty gaming, and one lesser integrated card for other tasks or when you want to save battery life. You can switch between them quickly, without rebooting.

I am not a serious gamer, but I briefly tested the M11x on some included 3D games, and they ran smoothly and well. The machine also did great on high-definition video and on common tasks like Web browsing, email and word processing. It’s also packed with ports, including an HDMI connector, the new standard for easy hookup to a TV.

On my tough battery test, the Alienware did pretty well, clocking in at just under four hours with the more potent graphics in use, and just under five hours with the lesser graphics turned on. In normal usage patterns, you could stretch these figures.

The downsides to this machine are that the keyboard is cramped, and the specs on the $799 base model might not satisfy a serious gamer or video creator. It has a relatively small 160-gigabyte hard disk and a low-end Pentium processor. The model I tested, with a 500-gigabyte hard disk, a Core 2 Duo processor and twice the base 2 gigabytes of memory, costs $1,099.

The Sony Vaio X is a world apart, a reminder that the company, which years ago pioneered small, thin, costly laptops, can keep doing so. This little computer can get lost in your briefcase.

The Vaio X comes in several colors, but has modest specs for the price. It uses the Intel Atom processor, common in netbooks, and integrated graphics. It only comes with 2 gigabytes of memory, and the base $1,299 model has a very small 64-gigabyte solid-state drive for storage. You can double the storage on the $1,499 model I tested.

The Sony (SNE) is gorgeous, and its lightness amazed everyone to whom I showed it. It handled all the common tasks I threw at it, including some HD video from YouTube, which played fine. But it also has a cramped keyboard, plus a tiny touch pad.

In addition to Wi-Fi, the Sony also includes a 3G cellular modem from Verizon, which I tested and which worked well. If you opt to use it, you have to pay Verizon, with monthly contracts starting at $40 and no-contract usage at $15 a day or $30 a week. All these plans have usage caps.

The Achilles’ heel of the Sony is battery life. Its petite built-in battery got a miserable one hour and 48 minutes in my test, which might mean 2.5 hours in normal use. Sony does include an expanded battery with the unit, which got an impressive eight hours and 11 minutes in my test, or perhaps as much as 10 in typical use. But this battery is huge. It covers the entire bottom of the machine and must be affixed with screws. The battery roughly triples the computer’s thickness and brings its weight to nearly three pounds.

These two creative designs show that, despite the coming wave of tablets, the laptop is still a platform for innovation.

Find all of Walt Mossberg’s columns and videos online, free of charge, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.

Computer Buyers Have to Consider System Upgrades

Walter S. Mossberg — Thu, 23 Apr 2009 01:02:07 +0000

If you’re shopping for a computer now, there’s an added factor to consider. Later this year, both of the major computer operating systems, Microsoft’s Windows Vista and Apple’s Mac OS X Leopard, will be replaced with major new versions: Windows 7 and Mac OS X Snow Leopard. And that affects what PC hardware you should choose.

So, in this annual spring computer buyer’s guide, I’ll pay particular attention to buying a machine for the new OS you may soon want.

This guide covers both laptops and desktops and is aimed at average users doing typical tasks. It doesn’t apply to hard-core gamers or video, audio or photo professionals.

[ See post to watch video ]

Cost: Prices on Windows PCs have plummeted. You can buy a Windows desktop for under $300, without a monitor, and a low-end, full-size Windows laptop for around $500. If you are willing to settle for a so-called netbook — essentially just a small, cheap laptop running the aging Windows XP operating system — you can get a decent one for $350, or less. Even Apple, which has resisted this cut-rate trend, is offering modestly lower prices or higher specs for the same prices as before.

Timing: Despite the bargains, you may want to wait to buy, if you can, until the new operating systems emerge. That’s because it’s usually easier and cheaper to buy a new machine preloaded with a new OS. You don’t have to pay extra for the new OS or hassle with performing the upgrade. Neither Microsoft (MSFT) nor Apple (AAPL) has set a date for their new OS releases, but both are likely by the holiday buying season.

This is especially true if you are thinking of buying a Windows Vista machine. Vista is slow and filled with annoying nag screens. Based on my tests of its prerelease, or beta, version, Windows 7 will be a huge improvement.

Windows vs. Mac: Apple’s hardware is beautiful and durable, and its OS is faster, easier and more stable than today’s Windows. Plus, the Mac isn’t susceptible to the vast majority of malicious software. Windows 7 will narrow this gap considerably, but Snow Leopard could keep Apple ahead, depending on how it turns out.

But Apple computers cost more upfront. The cheapest Mac desktop, the bare-bones Mac Mini, costs $599. And the cheapest Mac laptop is $999. So, if price is your top priority, buy a Windows PC. If speed, ease of use and stability matter more, buy a Mac.

Upgrading: Microsoft promises that upgrading a Vista machine to Windows 7 will be a straightforward process, preserving all of your files, programs and settings.

It’s a different story for Windows XP. Upgrading from that OS will be a cumbersome, multi-step process, requiring users to offload their files, wipe out the old operating system completely, and then reload the files and reinstall their programs. This is a particular problem for buyers of netbooks, nearly all of which come with XP.

In addition, Microsoft’s version of Windows 7 for netbooks, called the Starter Edition, is crippled. It can run only three programs at any one time, and won’t allow any customization of the desktop or the use of Windows 7′s snazzy graphical features. Microsoft says netbook owners also will be able to run the main Home version of Windows 7, at extra cost, but given the weak processors and graphics chips on netbooks, the experience may not be optimal.

Apple, which doesn’t make netbooks, claims Snow Leopard will be an easy upgrade on all currently available Macs.

Memory: Neither company has released the official specs for the two new operating systems, but both are likely to require a minimum of 1 gigabyte of memory. Such specs are usually understated, so I strongly recommend 2 gigabytes, even on cheap machines.

Graphics: In the new operating systems, adequate graphics chips will be more important than ever, because the computers will offload some tasks typically performed by the main processor onto the graphics chip. So, if possible, spring for what’s called a discrete graphics processor, which has its own memory. If you can’t afford this, look for an integrated graphics chip, which shares your main memory, that’s as powerful as possible. One example is the Nvidia 9400.

Processor: Microsoft and Apple say current processors will work fine with the new operating systems. The best bet is a dual-core processor. Some bargain machines use an older single-core model, which is OK for light-duty use. Netbooks, and even some laptops and desktops, come with a much wimpier processor called the Intel (INTC) Atom, which struggles at some tasks.

Touch screens: Windows 7 will include the ability to perform many multitouch gestures on the screen. But this will require a special type of touch screen, different from the ones on most tablet PCs today. A few current models, like Hewlett-Packard’s TouchSmart desktop, support this, but not many. So, if you’d like to use multitouch on Windows 7, ask to make sure your PC can handle it.

The bottom line: Don’t buy more machine than you can afford, or need. But protect yourself by getting one that can be upgraded to the new operating systems.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.

Mac Attack

John Paczkowski — Tue, 03 Mar 2009 17:55:51 +0000

[ See post to watch video ]

How to Get a (Slightly) Cheap(er) iPhone: Buy One Someone Else Returned

Peter Kafka — Tue, 06 Jan 2009 11:53:14 +0000

The long-rumored/wished for $99 iPhone has yet to arrive. But if you’re ready to buy a phone that supports iFart but don’t want to pay full price, you do have one option: Buy one that someone else decided not to keep after all.

Apple (AAPL) has quietly allowed some of its vendors to resell gently used iPhones for a while, but now Best Buy (BBY) is making it a standing policy. Reuters:

The electronics chain said the used iPhones, which were returned within 30 days of purchase, are priced at $149 for the model with 8 gigabytes of storage, while the 16-gigabyte version is $249. A two-year service contract with AT&T Inc. is required.

New iPhone 3Gs currently sell for $199 and $299 at Best Buy Mobile stores.”

AT&T (T) will also sell you a used iPhone at the same discount, though only online. But don’t bother looking for iPhone bargains at Apple’s online store: It’s one of the only products the company doesn’t offer in its bargain/refurbished section.