AOL investor: $1bn Microsoft patent deal not good enough A major shareholder in AOL wants to shake up the firm's board, saying its billion-dollar patent deal with Microsoft wasn't good enough. AOL has agreed to sell a bundle of more than 800 patents to Microsoft and license the rest of its intellectual property to the software giant and other firms. Agitating hedge fund Starboard …
Obviously one has to wonder about the smarts of owning 5% of AOL at the moment. Aside from that, if you're in and don't like the way they run their business then sell your holdings and put your money some place where you'll be happier. While I'm by no means a fan of AOL, activist shareholders are like back-seat drivers.
Maybe so, but activist shareholders do exactly what they are supposed to be doing: take an interest in what's being done with the company they partly own and what the board that they employ is up to. Most shareholders are content with letting the board cash in, run everything into the ground, then jump out with a golden parachute. Then lefties complain about how corporations are "evil" and similar crud.
@"one has to wonder about the smarts of owning 5% of AOL"
Starboard is playing a canny game. They want AOL to hold a fire sale to bring in good money (short term) and at the same time they want to influence the board to be more filled with more people who also want a fire sale. So they can then sell off the best bits then walk away (and then go do it to another corporation). Directors like this are like parasites who feed off the host until they kill it, then they seek out a new host and repeat.
@Asgard
Exactly. Look at what happened to Ireland’s telecoms company Eircom. A rich state owned monopoly that was sold off to the public in 1999, the company was bought up by string of investment companies and hedge funds, each company that bought Eircom loaded it up it debt, asset stripped the company (sold it's mobile network to Vodafone, sold it 's new headquarters building in a leaseback deal before it was built etc.) and then sold it on. At the same time there was little or no investment in national telecoms infrastructure.
Eircom have gone into examinership as it is unable to repay it’s debts, bond holders will be lucky to get back 10% to 15% of their original investment.
These so-called investment companies are parasites, they do not make money by creating wealth, they make money sucking the wealth out of the host company thereby destroying it.
And the best thing to do with parasitic infestations is to kill them off.
AOL is already a mere shadow of it's formerly massive dial up internet provider self. Allowing these "activist hedgefund shareholders" to load the board with cronies that will vote to skin the remains of AOL (while still alive) is simply criminal.
There is very little difference between this and what has already happened to Kodak and many other, once great American companies.
Along with the "Buffett rule", let's tax corporate rapists at 110% while simultaneously investigating every nook and cranny of their corporate bowels with a 4 ft diameter IRS probe.
If AOL and Kodak are your examples of this, then I'd like to point out that both companies were on extended life support after being irrelevant for YEARS before the vultures closed in.
Calling AOL alive made me chuckle too, it's more like a shambling corpse. It's been dead for a while now, the body just hasn't figured it out.
I think it needs to be skinned, gutted, and sold for scrap now while said scrap is still worth something... because in a few more years it will die anyway with a negative value and having chewed up a ton of capital that would have been better invested elsewhere.
Businesses fail, new ones start, that is how the free market works. Of course, judging by your vitriol aimed at the most common socialist scapegoat, I can see that you don't believe in the free market anyway.
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