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The Analyst Consensus On What Armstrong's Move Means For AOL, Google

This story was written by Rory Maher.
Analysts this morning have started to weigh in on Tim Armstrong's move from Google (NSDQ: GOOG) to AOL (NYSE: TWX), and the consensus is that it's a modest negative for Google and a positive sign that Time Warner is moving closer to spinning off AOL entirely.

Time Warner has struggled for years to define the course of the struggling AOL unit (and made a lot of management changes along the way), and most analysts agree that Armstrong wouldn't have made the jump if he didn't think the right structure would be found, specifically spinning off AOL into a separate public company. (That's exactly what our Staci Kramer said in her piece yesterday.)

Merrill Lynch analyst Jessica Reif-Cohen said Armstrong's addition combined with the recent hiring of Yahoo (NSDQ: YHOO) executive Greg Coleman to run Platform-A should help AOL better monetize its traffic, which it has struggled to do despite consistent audience growth in its content properties.
Merrill's Justin Post said the hire would also be a positive for the Google/AOL partnership since Armstrong played a major role in getting the deal done and knows how to get the most benefit out of that deal for AOL.  Post also cautioned investors not to expect AOL to be spun into a separate public company anytime sooneven if it is in the cardsgiven how poor the stock market is performing.

As for Google? Most analysts believe Armstrong's departure may weigh on Google's stock in the near-term, but won't have any long-lasting negative impact on the company. Barclay's Doug Anmuth notes that Armstrong is the most senior executive to leave Google since it went public in 2004, while Post didn't see any connection between Armstrong's exit and weak business fundamentals at Google (agreeing it is more about the opportunity to run AOL). Post also pointed out that the Google stock may have already weathered any short-term impact from the move because of the recent rumors Armstrong was a leading candidate for the Yahoo CEO position filled by Carol Bartz. Finally, Post believed Google should not have many problems replacing Armstrong with an equally competent executive.


By Rory Maher

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