AOL Rise 300% Off 12-month Low

Whether AOL’s share price is sustainable is questionable. Operating cash flow was just $167 million in the most recent quarter, compared to a $957 million inflow from investing, mainly the result of a patent deal with Microsoft Corp. (NASDAQ: MSFT). The company’s subscriber base for dial-up Internet access is dwindling and advertising revenue from its web portal is rising, but not fast enough.

AOL announced another $550 million share buyback program earlier this month that gives the company the ability to acquire almost 20% of the outstanding shares. That ought to keep investors happy for a while longer.

Eventually though, AOL is going to have to boost operating revenues and profits. That could be tricky.

Shares are off today about 0.5% at $33.68 in a 52-week range of $11.07-$34.51.

Paul Ausick