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June 25, 2012

AOL Shareholders May Have to Get their Dividends via a Stock Buyback



Recently, AOL completed a $1.056 billion patent transaction with Microsoft (News - Alert) Corporation. The transaction consisted of the sale of more than 800 patents and their related patent applications, and grants Microsoft a non-exclusive license to its retained patent portfolio for aggregate proceeds of $1.056 billion in cash.

But if the AOL (News - Alert) shareholders were expecting a fat dividend after this transaction, they may have to get those dividends via a stock buyback. According to an article, AOL has decided to go the share repurchase way to realize its gains from this transaction, after evaluating tax considerations and having talks with its major shareholders.

The patent sale might have helped AOL CEO Tim Armstrong in securing the company’s victory when it was looking to defeat an activist shareholder assault from the hedge fund Starboard Value. It also allowed the company to re-elect its eight directors 10 days ago, which analysts will provide its stock of almost 80 percent since the beginning of the year.

The effects on AOL shares from a huge buyback could be considerable, even without a dividend. Various Wall Street analysts have pegged the value of the patent payout at about $11 per share, the article stated.

The company stated in a press release, “AOL is committed to returning 100% of the patent proceeds to shareholders. AOL’s Board and management team are currently working on determining the most efficient and expedient method to return the proceeds of the patent transaction.”

Recently, the company released Winamp Album Washer, powered by Gracenote (News - Alert), a new feature in Winamp for Android that enables users to clean-up and organize audio files. This will create a more seamless user experience for passionate music fans, the company stated. Winamp is also looking to introduce updated offerings for both Mac and PC platforms showcasing Winamp's continued commitment to innovation as it celebrates its 15th anniversary.

Want to learn more about patents in the telecom industry? Then be sure to attend Synopsis Under IP/Patents Telecom Sourcing Conference (SUITS), collocated with ITEXPO West 2012 taking place Oct. 2-5, in Austin, TX. The SUITS Conference is launched to advance the legal knowledge of innovators of telecommunications including developers, implementers, licenses, licensors, end users, carriers and enterprise patents. Learn how to be aware and prepare to protect your most valuable assets, individual and company patents and intellectual property stored in the Patent Eco System or being held for security. For more information on registering for the SUITS Conference, click here.

Stay in touch with everything happening at SUITS. Follow us on Twitter.




Edited by Allison Boccamazzo
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