Little by little, AOL is offering investors more and more details about what the company will look like after it spins off from Time Warner (TWX).

The problem: The more AOL discloses, the less attractive the company looks.

The most recent nuggets come from a preliminary prospectus Time Warner filed with the Securities and Exchange Commission yesterday. Some, but not all, of this has broken out in previous filings or earnings announcements. In any case, it helps to see it all in one place.

The big picture: AOL’s subscription service, which accounts for the “vast majority” of the company’s operating income, is withering away. But advertising revenue, which was supposed to replace that money, has been declining for nearly two years (see tables below; click to enlarge):

And here’s a closer look at the ad business and its recent performance:

The good news for AOL is that some of this is the result of self-inflicted wounds, and it’s possible to heal some of them. The company’s previous regime seemed to go out of its way to mismanage and dismantle the sales force, for example, and if new CEO Tim Armstrong can rebuild that team, he can make a bit of headway.

The flip side is that some of AOL’s woes may be well beyond Armstrong’s control. Money from a Google (GOOG) search deal, which provided a third of AOL’s $2.1 billion in ad revenue last year–and had been increasing up until this year–is now dropping off, too.

Google dollars fell by $42 million in the most recent quarter, representing more than half the $75 million drop in ad dollars from its AOL Media unit. And Google income fell by $90 million in the last nine months, representing about 40 percent of $197 million decline in that period.

AOL says some of the Google decline stems from its declining subscriber base, which brought down search query volume. The rest is due to lower revenue per search query–that is, Google has changed its algorithm in way that ends up punishing AOL. But Armstrong can’t do a whole lot about either of these variables.

He can try extracting more money from Google, whose search deal expires at the end of next year, or from Microsoft (MSFT), which is trying to gain share any way it can.

Earlier this year, Armstrong turned down a new deal from Google and now says he’ll deal with search after he gets other things in place. But the longer he waits, the less leverage he may have.

AOL shareholders will be paying Armstrong well to figure this out, though. His three-year deal pays him a base of $1 million a year, plus annual cash bonuses of up to $4 million. In addition, he’s getting $20 million worth of stock grants to make up for Google shares he left on the table when he resigned from his old employer. And he’ll get stock options worth as much as 1.5 percent of the company once the spinoff is complete.

That said, AOL will also be paying former AOL CEO Randy Falco, who got tossed out in March. Falco will continue to pull down a $1 million salary through 2010–and he’ll get $7.5 million in bonuses through then as well. Former AOL COO Ron Grant, meanwhile, will earn $750,000 a year, plus another $3.3 million in bonuses.

Could Comcast (CMCSA) be talking to NBC Universal about…something? Could be–that’s what the Los Angeles Times and other outlets reported last night.

And Comcast’s statement says there’s no “deal,” which doesn’t preclude “talks about deals.” Then again, it’s awfully unusual for a company in Comcast’s position to say anything at all.

Clear as mud? Then this won’t help. Check out these comments from Comcast COO Steve Burke at a Sept. 9 conference hosted by Bank of America (BAC) where analyst Jessica Reif-Cohen asked him about his appetite for acquisitions.

Burke said he’d love get more cable channels (like the kind NBCU owns). And he said he didn’t want a really big deal that would require the company to use its shares or take on a lot of debt (like, say, a $35 billion deal for NBCU). He said all this, by the way, in the span of a single answer.

I’ll carve it up and translate for you:

We’ve had plenty of debt, and we don’t want any more right now, thank you very much.

Well, if you look at cable companies over the last 10 or 20 years–I joined the Company 11 years ago. It is really amazing how deleveraged our Company and other cable companies have gotten….We like where we are from a leverage point of view and I think [we] would be uncomfortable if our leverage was significantly higher.

But boy oh boy, are cable channels attractive!

At our core, we believe that content and distribution work well together….I think there are a lot of case studies where content and distribution, particularly in a world where the distribution has technology that can deliver content in new and innovative ways, you really can create a lot of value by putting content and distribution together, particularly if that content is cable content.

And again, when you look at the big media companies, the best businesses that all of us have in the entertainment business I think are the cable content channels and those channels with that dual revenue stream are really good businesses. And I think we wouldn’t be doing our job if we didn’t try to figure out a way to get bigger in those businesses. Those businesses are growing more rapidly than our cable business and if the opportunity came about where we could add cable content to our portfolio, I think we would do it.

But really, we’re not in the market for a mega-deal.

Just to sort of get it right out there, I don’t think that means doing a big deal with our stock. I think all of us think our stock is significantly undervalued. So I don’t think that means doing a big deal with our stock. I also don’t think that means doing a big $50 billion acquisition. I think it is more trying to find opportunities that are complementary with our core business, that don’t take our balance sheet and push it back into a position, which we have worked so hard to get it down.

Never say never!

We are going to try to make sure that we are disciplined and we have high IRRs and good free cash flow generation and we will see if anything comes available. If it does, we will certainly look at it.

Got it? Me either. The only way I can reconcile Burke’s comments with the notion that Comcast is interested in an NBCU deal would be if Comcast was talking about buying Vivendi’s 20 percent stake in the NBCU.

Comcast could swing that one without breaking the bank–the conventional wisdom is that it would cost something in the $5 billion range. And it would technically increase Comcast’s cable network holdings, as Burke says he wants to do. But not really: Comcast would be a minority shareholder with no clear path to control. And it wouldn’t get the “distribution plus content” benefit Burke was talking about last month.

Anyone else have any ideas? Feel free to sound off below.

As I write this, Palm is trading at $6.10–up an astonishing 85 percent since its big announcement. And it seems destined to go higher still, given the enthusiastic reception analysts have given it.

Deutsche Bank’s Jonathan Goldberg raised his rating on Palm (PALM) to Hold from Sell saying this morning that he is impressed with the Pre and the direction in which the company is now heading.

“Our thesis on Palm has been that its future is a binary outcome,” he wrote in a note to clients. “We are favorably impressed with the new device and more importantly with the new WebOS. We think the focus has now shifted from their mere survival to execution. The earnings model has the potential for significant earnings leverage, but our outlook is tempered by Palm’s history of missteps. We think they can ship 1m units FY09 and 4m in FY10. The stock has run significantly over the past two days reflecting this, but as we learn more about the popularity of the OS and the potential for them to actually ship a UMTS version of the Pre this year we will revisit our thesis.”

Obviously, there are a few noteworthy caveats in there. Still, Goldberg’s note is vastly different from the funereal notes analysts were writing about the company less than a month ago. Indeed, on Dec. 18, Canaccord Adams analyst Peter Misek essentially dismissed the company. “Due to increased competition in the industry, Palm has lost its place as a leading smartphone manufacturer and has gradually become less relevant as more competitors have introduced more innovative smartphone devices,” Misek said. “The company is financially distressed and lacks any viable future catalysts which could help restore profitability…. We believe that Palm has become largely irrelevant in the smartphone space due to a series of strategic errors and poor execution.”

Clearly, Palm’s situation has changed for the better. Now, let’s see for how long.

As I write this, Palm is trading at $6.10–up an astonishing 85 percent since its big announcement. And it seems destined to go higher still, given the enthusiastic reception analysts have given it.

Deutsche Bank’s Jonathan Goldberg raised his rating on Palm (PALM) to Hold from Sell saying this morning that he is impressed with the Pre and the direction in which the company is now heading.

“Our thesis on Palm has been that its future is a binary outcome,” he wrote in a note to clients. “We are favorably impressed with the new device and more importantly with the new WebOS. We think the focus has now shifted from their mere survival to execution. The earnings model has the potential for significant earnings leverage, but our outlook is tempered by Palm’s history of missteps. We think they can ship 1m units FY09 and 4m in FY10. The stock has run significantly over the past two days reflecting this, but as we learn more about the popularity of the OS and the potential for them to actually ship a UMTS version of the Pre this year we will revisit our thesis.”

Obviously, there are a few noteworthy caveats in there. Still, Goldberg’s note is vastly different from the funereal notes analysts were writing about the company less than a month ago. Indeed, on Dec. 18, Canaccord Adams analyst Peter Misek essentially dismissed the company. “Due to increased competition in the industry, Palm has lost its place as a leading smartphone manufacturer and has gradually become less relevant as more competitors have introduced more innovative smartphone devices,” Misek said. “The company is financially distressed and lacks any viable future catalysts which could help restore profitability…. We believe that Palm has become largely irrelevant in the smartphone space due to a series of strategic errors and poor execution.”

Clearly, Palm’s situation has changed for the better. Now, let’s see for how long.

Munster says he expects the U.S. savings rate to increase significantly over the next few years, following 25 years of increasing leverage and a declining savings rate. The good news is that will allow households to rebuild savings, home equity and investment portfolios. The bad news is that it means less consumer spending.

“Nearly all drivers of consumer spending, including employment, employee earnings, consumer credit, household wealth and consumers’ propensity to save, are all moving in a direction to drive spending lower over the near-term,” he writes in a note.

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