This time last week, I, like nine out of every 10 investors, believed AOL (AOL) was a dead-end investment. How could it not be? This is no longer a 56k, dial-up world, when those ubiquitous AOL disks inundated mailboxes. AOL botched the chance to morph into a broadband player with its spectacularly bad marriage to Time Warner (TWX). AOL is behind on social media, and is struggling to compete for ad dollars with Google (GOOG) and Facebook. Its sales declined in each quarter last year.
How many chances does a legacy company get? (Remember this reinvention?)
Then, on April 9, as if out of nowhere, Microsoft (MSFT)dropped in to buy $1 billion of AOL’s patents, sending the latter’s shares up 43 percent in a single day. In the two years leading up to the deal, the stock was down 37 percent.
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