AOL Pressured by Stockholders to Cut Losses

NEW YORK, Dec. 21, 2011 /PRNewswire/ – Starboard Value LP (together with its affiliates, “Starboard”), today announced a 4.5% ownership stake in AOL Inc. (“AOL” or the “Company”) (NYSE: AOL), making it one of the Company’s largest shareholders.  Starboard also delivered a letter to the Company’s Chairman and CEO, Tim Armstrong, and the Company’s Board of Directors.  In the letter, Starboard expressed that based on its detailed research and analysis, AOL is deeply undervalued and that substantial and actionable opportunities exist to significantly enhance shareholder value.  Starboard believes this valuation discrepancy is primarily due to the Company’s massive operating losses in its Display business, which they state could be in excess of $500 million, as well as continued concern over further acquisitions and investments into money-losing growth initiatives like Patch.  Starboard urged the Board to take immediate action to address the significant concerns highlighted in the letter and hopes to have an in-person meeting with the Board to more fully discuss Starboard’s views.

Starboard Value CEO Jeffrey C. Smith stated, “While we understand and appreciate that the Company’s Access business is in secular decline, we do not believe this serves as justification for continuing to pursue a money-losing growth strategy in the Display business that has repeatedly failed to meet expectations and drained corporate resources.”

Mr. Smith continued, “AOL shareholders have already suffered substantial losses due to the pursuit of the failing Display strategy and immediate action must be taken to address this issue as the Company continues to invest good money after bad without an acceptable return on investment.”


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