Google’s $1 billion investment in AOL ‘may be impaired’
In December, 2005, Google announced that it would be pay $1 billion cash for a 5% indirect equity stake in AOL and in 2006 the deal was complete. The move allowed the two companies to maintain a relationship the had started several years earlier, plus it allowed Google to keep Microsoft from becoming a search and ad provider, giving Google a big advantage.
At the time of the deal Google estimated AOL’s value at around $20 billion, but it’s not quite as big as it used to be. In the last six quarters nearly half of AOL’s subscribers have left, lower it’s total number of subscribers from 17.6 million to 9.3 million.
Also falling is the companies value which is now estimated by some to be around $10 billion.
On the Google side, when filing their quarterly financials with the SEC they have had to admit that they believe that their “investment in AOL may be impaired.” They would continue to review the investment and in the future financial write-downs may be required.ao
Don’t feel too bad for Google–they’re still doing okay. As of June 30th they have $12.7 billion in cash and aren’t exactly struggling.