It’s a far cry from the $20 billion value that Google placed on AOL when it invested $1 billion for a five percent stake in the company in 2005. But $4.2 billion is what JP Morgan analyst Imran Khan now speculates the company is worth as Time Warner gets ready to spin the company off by the end of this year, close to a $4 billion valuation put on AOL by Pali Research analyst Rich Greenfield.

The company’s value has apparently declined since the beginning of the year: when Google wrote down it’s stake in the company in January, it placed a value of $5.5 billion on the company.

AOL doesn’t have much to blame other than itself: the company was slow to change with the times, and the transition from dial-up to broadband left the company without a major source of revenue. It’s try at selling advertising, while not a failure by any means, certainly did not fill that void.

Not everybody is down on AOL’s chances. Let us remember that the company still has a large traffic base to its properties, and Greenfield says that “there could be meaningful valuation upside – not to mention, the upside if M&A speculation surfaces” if AOL’s new CEO Tim Armstrong can play his cards right.

I’m no expert on mergers and acquisitions, but I don’t see the company being a merger target for anyone anytime soon. AOL’s still existing dial-up business is a costly one to take on, especially considering its all but certain that part of the company’s bottom line is all but set to disappear over the next few years.

Then again, stranger things have happened…

 
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