According to TechCrunch, that would give Platform-A a top-end valuation of around $20 billion, which is what all of AOL was valued at when Google took its 5% stake.

Why this is harder than it looks:

AOL has made mistakes integrating all these acquisitions into a single "Platform-A" advertising unit. Its sales forces weren't aligned, and in some cases they were undercutting one another on prices. Early results, accordingly, were mixed. Non-search ads on AOL sites declined 18 percent compared with the same period in 2007 and ad dollars were flat in the first quarter. Yet, Platform-A saw big growth in ads that AOL brokers for third-party sites. You guessed it: these are the sites vying for the same eyeballs as AOL's new niche sites.

Conclusion --

The re-invention of AOL continues. The most conspicuous success is Platform-A but even the new expanded network of web sites including the AOL portal and all the niche sites are showing growth. Management has at least committed to experimenting and trying new things (Bebo, for example) and inevitably some of the things will work and some won't. In the meantime, the Internet access business continues to wither away and AOL is pushing hard to be one of the top players in the ad network space.

It seems that AOL is at least being somewhat conservative in how much they are paying for some of these moves. Platform-A was put together without breaking the bank. Bebo's price seems too high to me but then the company could have gotten really carried away during the some of the recent mania for social networking sites and paid a lot more. The niche sites AOL is creating may not be terribly expensive as each is quite focused and has many characteristics of blogs. Blogs tend to not be that expensive to set up and run so the incremental cost will revolve around the acquisition of talent to create content.

So AOL is working to attack the dual problems of sagging revenues and becoming an Internet has-been. They are seeing traffic improve and that is an important first step. If they can just start to monetize more of that traffic and see some of the revenue numbers start to improve, that would be the confirmation investors need to accord the AOL unit a higher valuation. And that would certainly benefit parent Time Warner and its stock price.

Disclosure: at time of writing author is long TWX