AOL: You've Got Stock

When it comes to the top-ten lists of terrible M&A deals, you’ll always get the Time-Warner/AOL combination (TWX). It was a classic case of hubris, culture clash, misguided strategy and downright stupidity.

But since then, AOL has shored things up — and even has some hot web properties as well as a solid ad business.

Although, it appears that the next step is: a spin-off (hey, eBay (EBAY) plans to do this with Skype, as well).

In fact, the process has been in the works for some time – with AOL trying to find suitors (although, the price tag may have been underwhelming, especially in the current market environment).

Whatever the reasons, I think it makes sense to have more clarity in the various businesses. True, there is synergy between online and entertainment – but it can be a tough thing to pull off.

Besides, with a grim advertising market, it’s important to have more focus. Keep in mind that in Q1, ad revs for AOL dropped about 20%.