AOL Shares Dip In Debut, as Time Warner's Rise

NEW YORK (Reuters) - Shares of AOL Inc., fell about 2 percent have their return to trading on the New York Stock Exchange on Thursday, following the Internet company's spin-off from Time Warner Inc., while shares of AOL's former parent rose.

The stock was expected to come under pressure, as holders who were former Time Warner investors might have large-cap dividend-yield or requirements that force Them to unload AOL shares.

Miller Tabak analyst David Joyce said, however, that the near-term turbulence following the spin-off could create an entry opportunity for a cheap stock. AOL, they initiated coverage with a "buy" rating and a $ 32 price target.

That compared with AOL's early afternoon share price of $ 23.15, down 2.2 percent.

"Higher Valuations Will Rely be the Investors' confidence improving over time that AOL is executing on its content and advertising strategy," Joyce said in a client note.

AOL Chief Executive Tim Armstrong was at the opening bell ceremony on the NYSE Thurs mark his company's return to trading, and he has tried to position the company as an online content and advertising investment.

But Wall Street and investors have been concerned about AOL's ability to turn around in the face of an advertising Slump and competition from other Internet companies like Yahoo Inc.

Meanwhile, Time Warner shares appeared Thurs benefit from the end of its nine-year failed experiment Thurs integrate traditional media with Internet distribution. Its stock was up 4.4 percent to $ 30.51.

"There was interest in the building stock Because it's trading below its peers, but investors were waiting for AOL to be spun out before getting in," Collins Stewart analyst Thomas Eagan said of Time Warner.

In an internal memo to staff, Time Warner CEO Jeff Bewkes said the company is returning to its roots as a "content-focused" company.

Time Warner is home to cable networks like HBO, CNN, TNT and TBS, magazines like Time, People and Sports Illustrated, and Hollywood studio Warner Brothers. The AOL spin-off comes after Time Warner did the same with Time Warner Cable Inc., in March.

Bewkes said Time Warner will drive Stockholder Returns "by" paying a healthy dividend, buying back our stock and continuing Thurs Evaluate opportunities to make strategic acquisitions that meet our stringent standards. "

AOL was added to the Standard & Poor's MidCap 400 index after the close of trading on Wednesday, replacing Imation Corp.