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Google's $1bn AOL stake turns to dust

Impairment is 'temporary'

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Google told the Securities and Exchange Commission yesterday that its investment in AOL is likely to be worth less than it paid for it in 2005.

The search and ad giant bought a five per cent stake in AOL for $1bn in December 2005. Alongside the investment, Google provided search functions on AOL sites and a white label version of its ad technology. This was used to create AOL Marketplace for selling AOL ad inventory direct to advertisers. Google was also supposed to promote AOL video content via Google Video - this was before the purchase of YouTube.

It told the SEC yesterday that it had reviewed the investment as required by regulations and: "Based on our review, we believe our investment in AOL may be impaired. After consideration of the duration of the impairment, as well as the reasons for any decline in value and the potential recovery period, we do not believe that such impairment is other-than-temporary."

Analysts put today's value of AOL at closer to $10bn than the $20bn it was at the time of Google's investment.

We should find out if Google is right or not quite soon - Time Warner is desperate to flog the business off. ®

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