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AOL (AOL) has been on fire the last two days, sitting at near $42/share as this was written.

The reason is simple: The company will pay a special dividend of $5.15/share. Even at $42, that's a guaranteed yield of 12% for money held in the stock for a little over a month.

Trouble is, will you be able to get anything near your money out once that date passes? Or is this a blue-light special for fat-fingered traders only?

The results announced by CEO Tim Armstrong look like a head fake. Yes, it made a profit, but revenues were flat at $532 million and display advertising revenues in the U.S. were down. The company's cash cow, its modem-fed ISP business, continues to dribble away -- down another 10%. Eventually that goes away. Leaving what, exactly?

Armstrong claims there will be a "barbell" holding up the company's results in the future, a combination of "programmatic buys" bought electronically on the low end and video ads bought at the high end.

Street Authority was predicting a 50% upside on the stock in October, when it was trading at around $36, giving a price target of $54. Street Authority likes AOL's efforts in video, content, and email. Around the same time, Trefis disagreed, giving a price target of $29.

At the time of the dividend, I expect more to agree with Trefis than Street Authority -- no offense. There will be considerable downdraft, and it will be tough for you to get out with your $5.15 and your basis intact.

So if you're going in, I think you need to be bullish on AOL as a going concern.

The last time I talked to AOL management, it was stuck with a very obsolete technical platform. Looking at the company's results since then, I see almost $70 million in depreciation write-offs, which have since gone down to a $10 million/quarter rate. Is all the garbage gone?

AOL has moved its email service, now called Alto, to a cloud platform in limited release, with general release due early next year. Its plan is to move into "curated content" under the name AOL ON, with video for tablets and other mobile devices as the drivers. The company also claims that Patch, its troubled hyper-local site, is on track to make money by the end of next year with new monetization schemes built around the needs of local businesses.

Maybe.

I have to say it's speculative, although the continuing drain-swirling among local newspapers makes me more hopeful for Patch than I might otherwise be. But can email and video really gain traction in a crowded market, in time to make up for steadily declining online revenues?

Armstrong has mainly kept a low profile since being heavily ridiculed for buying The Huffington Post, although he recently sat down for an interview with Silicon Republic. He seems to have brought Arianna Huffington into something like control, bringing TechCrunch founder Michael Arrington back as a contributor, for instance.

But do you want to bet on this jockey? If you're buying AOL today, that's what you're doing. I don't think you're going to get anything like a 12% return on an investment made today, not in the near term, because I don't think you're going to be able to get out in time to beat the pros when the price drops.

So I'm avoiding this trap. I do see some promise in what Armstrong has been doing this year, but the jury is still out for me on whether or not it will work.

Source: Anything In AOL Besides That $5.15 Dividend?