Google downbeat on AOL stake

Google has said in a filing with the Securities and Exchange Commission that its $1bn investment for a five per cent stake in AOL "may be impaired" and that it may have to take a charge in the future.

Google said: "Based on our review, we believe our investment in AOL may be impaired... We will continue to review this investment for impairment in the future. There can be no assurance that impairment charges will not be required in the future, and any such amounts may be material to our Consolidated Statements of Income."

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The December 2005 deal secured a renewal of Google's search advertising deal with AOL, preventing its largest ad partner from defecting to Microsoft. The deal gave AOL a valuation of $20bn at the time.

Google didn't estimate in its filing what AOL might be worth today but observers have suggested a figure closer to $10bn.

Google's deal allows it to demand Time Warner spin off AOL in an initial public offering of stock or buy back its stake, which would result in a $500m loss for Google.

Time Warner, perhaps signalling its intention to dispose of AOL to focus on its media business, announced Wednesday that it would split AOL's dial-up unit from its advertising business by early 2009.

Original article: Google sours on $1 billion AOL investment from CNET News.com