AOL Top Shareholder Starboard Airs Its Grievances

AOL’s (NYSE:AOL) largest shareholder is none too pleased with the company’s investment strategy. Activist fund Starboard Value, which owns a 4.5% stake in the company, wrote a letter to AOL’s CEO voicing its concerns. AOL has been trying to reinvent itself, leaving its subscription-based dial-up days in the past and focusing on becoming an ad-supported media player, but so far the move has been unsuccessful.

Though Starboard did not call for the sale of the company as many of its investors have, the fund called for “immediate action” to address AOL’s “money-losing growth initiative” per the Wall Street Journal. Jeffrey Smith, Starboard’s managing member, said that AOL was deeply undervalued and its current $1.4 billion market capitalization reflects only the company’s cash and dial-up business, giving no value to the online media business.

AOL issued a rebuttal yesterday in a written statement that said the board and management team would “remain firmly committed” to creating value for its shareholders. “We will continue to aggressively execute our strategy in 2012 as we continue the turnaround of AOL,” the company said.

The statement also said that AOL had cut costs, sold noncore assets and made “significant investments for our future” during the past two years, according to the Wall Street Journal. AOL’s stock has fallen almost 70% this year.