Even though the shares of AOL (NYSE:AOL) are up about 83% this year, activist shareholder Starboard Value is still not satisfied (it has a 5.3% stake). The hedge fund is pushing to replace the company’s board with its own slate. In fact, it also has put together a 96 page presentation deck that shows what’s wrong with AOL’s management.
Keep in mind that the main reason for the stock’s surge is the sale of patents to Microsoft (NASDAQ:MSFT), which is is a one-time thing.
According to Starboard, AOL’s core business is weak. Despite massive investments in acquisitions like the Huffington Post, the display ad business is losing about $500 million a year.
Another problem is Patch, which is a set of local websites. Unfortunately, the revenues were $13 million last year — but expenses came to $160 million. And it looks like revenues could actually decline. AOL CEO Tim Armstrong, however, is remaining steadfast in his commitment to the hyperlocal news service.