Time to dump AOL?

I can't figure out what Carl Icahn thinks he can do that Dick Parsons can't. The Wall Street Journal reported this week that Icahn wants Time Warner to dump much of its cable division and even spin off its publishing unit. So far, Icahn's not calling for management to get rid of AOL. But a lot of other folks, who have rightly hated the AOL-Time Warner deal from the outset, are making that very case.

I think they're jumping the gun.

We all know that Steve Case snookered Gerald Levin into merging the companies -- an awkward combination that rates as one of the biggest corporate boondoggles in memory. But that's also ancient history and hardly a harbinger of Time Warner's prospects. AOL obviously is not the same sizzling property it was during the bubble days. Still, folks who say Parsons should dump the business because its doom is sealed are overly pessimistic to the point of being myopic. I'll even offer this heresy: Time Warner could be on track to realize some of the original promise behind the ballyhooed deal with AOL.

Note the hedge: I didn't say all of the promise. I don't know how long shareholders will have to wait to regain their stock's once-lofty value. But the online business is poised for an upswing. True, AOL's sales in the last quarter fell by 3.7 percent on a 9% decline in subscription revenue. The other side of the coin was a 45% rise climb in ad revenue--and that's even before the company gets going on its plans to reposition its AOL.com site as more general-purpose portal. (The latest G2 suggests they'll be ready by early fall.)

The question is how long do you believe smart people can be dumb about what they've got? I think Time Warner gets it. The post-Case crew running the company is just as smart as the boy geniuses over at Google. They just need a little more time.