Stingy AOL Won’t Give Shareholders What They Want
AOL (NYSE:AOL) has decided to use the cash from its $1 billion patent portfolio sale to Microsoft (NASDAQ:MSFT) to buy back stock instead of offering dividend to shareholders. At the time of the sale, the company had said it would return the proceeds to shareholders. After examining tax strategies, it has now decided that stock buyback is the better option.
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While the news would be disappointing to shareholders, stock buybacks do usually lead to an increase in the company’s stock price. AOL’s share price has fallen 20 percent over the last five years, and 8 percent in just the past year.
The sale, which was completed on June 15, included 800 patents and patent applications. Microsoft later said it would assign a portion of the purchased patents and applications to Facebook (NASDAQ:FB) as part of a $550 million cash deal. Facebook is currently involved in a court battle with Yahoo (NASDAQ:YHOO) over patent infringement claims and also bought 750 of IBM’s patents regarding “software and networking” technologies in March.
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