AOL Shares Surge on $1 Billion Patent Sale

AOL shares surged more than 43 percent on Monday, making it one of the best performers on the New York Stock Exchange, after it was announced the company had struck a deal to sell 800 patents for just over $1 billion. The gain was AOL’s biggest in more than two years, and more than makes up for an 8.2 percent slide in the stock over the past year. Microsoft shareholders didn’t respond as favorably to the announcement of the patent deal, as shares slid 1.3 percent on the day.

Under the deal, Microsoft acquires a trove of about 800 patents and related technologies, and allows AOL to breathe a little easier as it continues to deal with declining ad revenue and dial-up subscribers. AOL stock has fallen nearly 30 percent since it was spun-off from Time Warner in November 2009, and has faced pressure from some major shareholders to make moves like the patent sale. Analysts applauded the deal, from AOL’s standpoint, noting that few observers expected the sale to generate anywhere near $1 billion.

Microsoft, meanwhile, acquired the patents to beef up its portfolio for the ongoing patent battles going on between pretty much every major tech firm in the world. Apple, Google, Facebook and others have also been buying up patents, with the latest major move being the $12-plus billion Google takeover of Motorola Mobility, announced last month and still going through the approval process. AOL spokesman Tim Armstrong, meanwhile, said the licensing arrangement between the two parties would generate more than $100 million in revenue over the life of the patents, enabling the company to pay out shareholder dividends and execute share buybacks.