AOL Inc. Shares Up on Layoff News

AOL Inc. (NYSE:AOL) just starting trading again on the NYSE, one of the first moves was yesterday's announcement to cut 1/3 of the company staff.  Shares are up 1.2% to $23.50 on the news, Merry X-Mas AOL'ers.

AOL’s board has officially approved the restructuring started by CEO Tim Armstrong last month, as part of its first official board meeting as an independent and public company last week, according to an SEC filing. The company has said before it will be slashing a third of its staff of about 7,000 through voluntary buyouts and layoffs.

In the filing, it said that the $200 million or so in charges related to this reorg, about $150 million would be in severance and benefit costs, and up to $50 million of charges related to facility closures and other costs.

Citigroup equity research initiated coverage of AOL, Inc. (NYSE:AOL) with a Hold/Speculative rating and target price of $29 Wednesday. Citigroup analyst Mark S. Mahaney said that of all the turnaround stories in the tech sector today (eBay (NASDAQ:EBAY, Yahoo (NASDAQ:YHOO) and Monster Worldwide (NYSE:MWW)), AOL is probably the "toughest one, given the current 28% Y/Y decline in its Subscriber base and 38% Y/Y decline in its EBITDA. With the foreseeable outlook for revenue and margin declines, it's hard to see a near-term Fundamentals-based AOL Buy call. But with a 3x EV/EBITDA valuation, its hard to see a near-term Valuation-based AOL Sell call."

SOURCE: http://www.mysmartrend.com/nw/16374