Merriman Curhan Ford Initiates Coverage on AOL Inc.
December 10 2009 - 4:06PM
PR Newswire (US)
SAN FRANCISCO, Dec. 10 /PRNewswire-FirstCall/ -- Merriman Curhan
Ford (NASDAQ:MERR) initiated equity research coverage today on AOL
Inc. (NYSE: AOL) ($23.52), with a Sell rating. (Logo:
http://www.newscom.com/cgi-bin/prnh/20090911/MCFLOGO) Equity
research analyst Richard Fetyko highlighted these themes in his
initiation report: -- We are initiating coverage of AOL with a Sell
rating. All of the company's segments are in decline, including the
largest and most profitable one, Subscriptions, which is in secular
decline. Moreover, as the subscriber base shrinks, it will also
drag down the pageviews in the AOL Media segment, making the
turnaround even more challenging. The Google contract (18% of
revenue) will expire in 2010 and likely renew at less favorable
terms. We believe that revenue and cash flow declines (organically)
will not stabilize until 2012. We would be buyers of the stock
approximately $15-18 per share. -- Our DCF analysis yields a $25
share price; however, with no visibility into the AOL Media segment
turnaround, we see the stock going to $15-18 range before it
stabilizes. EV/EBITDA valuation does not make sense since EBITDA is
declining for next few years; hence, the valuation multiples will
actually worsen. We do not see AOL as an acquisition candidate near
term, at least until the search contract renews, which is at the
end of 2010. Members of the media can obtain a copy of this
Merriman Curhan Ford research report by e-mailing the Equity
Research department at . About Merriman Curhan Ford Merriman Curhan
Ford (NASDAQ:MERR) is a financial services firm focused on
fast-growing companies and the institutions that invest in them.
The company offers high-quality investment banking, equity
research, institutional services and corporate & venture
services, and specializes in five growth industry sectors:
CleanTech, Consumer/Internet/Media, Health Care, Natural Resources
and Technology. For more information, please go to
http://www.mcfco.com/. Important Disclosures This research has been
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& Co. expects to receive or intends to seek compensation for
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Disclosures -- MCF & Co. has not received compensation for
investment banking services within the last 12 months, and does not
expect to receive or intend to seek compensation for investment
banking services in the next three months, from AOL, Inc. -- Within
the last 12 months MCF & Co. has not managed or co-managed a
public offering for AOL, Inc. -- MCF & Co. does not make a
market in AOL. -- Neither Richard Fetyko nor a member of his
household owns shares of AOL. -- Neither MCF & Co. nor its
officers, principals, employees, or owners own options, rights, or
warrants to purchase AOL. -- No MCF & Co. employee serves on
the board of directors of AOL, Inc. -- Neither Richard Fetyko nor a
member of his household serves on the board of directors of AOL,
Inc. -- Neither MCF & Co. nor its affiliates beneficially owns
1% or more of an equity security of AOL, Inc. Key to Investment
Rankings (expected total share price return inclusive of dividend
reinvestment, if applicable) Rating Percent of No. of Description
Percent of companies ------ Universe Stocks ----------- under
research -------- ------ coverage from which MCF & Co. received
compensation for investment banking services provided in the
previous 12 months or expects to receive or intends to seek in the
next three months ---------- Buy 76% 87 MCF & Co. expects 9%
--- --- -- the stock price to -- appreciate 10% or more over the
next 12 months. Initiate or increase position. -------------------
Neutral 22% 25 MCF & Co believes 0% ------- --- -- the stock
price is -- fairly valued at current levels. Maintain position or
take no action. ------------------- Sell 2% 2 MCF & Co. expects
0% ---- -- -- the stock price -- to depreciate over the next 12
months. Sell or decrease position. ------------------- MCF &
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http://www.newscom.com/cgi-bin/prnh/20090911/MCFLOGO
http://photoarchive.ap.org/ DATASOURCE: Merriman Curhan Ford
CONTACT: Richard Fetyko, Managing Director, +1-646-292-1446, ; or
Charles Mastellone, Supervisory Analyst, +1-646-292-1429, , both of
Merriman Curhan Ford Web Site: http://www.mcfco.com/
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