AOL (AOL) Takes Flight... Again

In an attempt to regain the glory days of the dotcom bubble when the company was relevant, AOL (NYSE: AOL) is now free of the Time Warner (NYSE: TWX) shackles and set to wage war against on the Internet once again.

The company which will be a "Jared from Subway" version of its former self, will now butt heads with the likes of Google Inc. (NASDAQ: GOOG), Yahoo Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) for its share of the $29 billion U.S. market of online advertising.

The company has plans to become a top source for news, information, entertainment and other digital content with a man at the helm that knows a thing or two of how a successful Internet company is supposed to be.

Tim Armstrong, Chief Executive of AOL, is a 38-year-old former executive for Google in its advertising business. He has been preparing AOL for its divorce from a messy marriage with Time Warner since he took over in April.

Despite leaving Google, it seems Google CEO Eric Schmidt and Armstrong have a good relationship. On his twitter page, Schmidt said "AOL goes public today; good luck, best wishes, and congratulations to our friend Tim and his entire team!"

So far Armstrong has announced plans to lay-off 2,500 employees, or one third of the company’s workforce, and has reshuffled the executive team and assembled a board of directors that will aid in the financial particulars that AOL will now face as a once-again independent entity.

The layoff program right now is being offered to employees as a voluntary measure that will give outgoing workers a buyout plan. The program ends Friday and AOL will make involuntary cuts if goals are not met.

AOL will pin its current hopes on people coming to its homepage to use the news services, email and instant messaging, while pushing its MapQuest brand. The company owns and will operate over 80 niche sites that will provide users with a bevy of additional content.

Armstrong has to deal with the rapid decline in the company's subscription-based dial-up internet access, which was the cog that made AOL an online-giant during the dotcom boom. Since high-speed interest access has taken over.

In the last year AOL has seen an 11 percent drop in traffic to its sites in the past year, and revenue for the company has fallen from nearly $9 billion in 2002 to just over $4 billion in 2008.

As for Time Warner, the feeling of relief from the end of the disastrous merger is mutual. The company can now move forward to addressing the issues surrounding its cable television, film and magazine businesses in a consumer climate that is seeing higher demand for digital sources of news and entertainment.

Analysts have been muted on the return of AOL, with most rating it Neutral. Miller Tabak was the lone Buy rating and Merriman Curhan Ford was on the other extreme with a Sell.

Shares of AOL are trading down 1.82 percent at $23.24 on the day, while Time Warner is receiving positive sentiment form the market as its shares are up 4.31 percent to $30.47.

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