Why Wall Street Hates the AOL HuffPo DealS

AOL shares closed down 26 percent today, despite posting its first ad sales increase since the company was spun out from Time Warner. The problem? The disastrous AOL-HuffPo merger seems to be catching up to the internet conglomerate.

Yes, AOL sold five percent more ads in the June quarter than in the same quarter last year. But last year at this time AOL didn't own the Huffington Post or TechCrunch. Factoring in those site's past revenue, it turns out they are actually slowing down under AOL, with ad sales growing 9 percent versus 12 percent in the prior quarter.

Tim Armstrong, the Google sales chief turned AOL CEO, staked his career on the Huffington Post acquisition and on the broader idea of turning AOL into an online content hub. Investors have now rendered a punishing verdict on the first full quarter under the merger. Before the hard numbers, there were plenty of warning signs: Bungled layoffs, bungled firings, and a heavy handed imposition of Huffington's will and brand that has AOLers feeling like bullied schoolkids.

Why Wall Street Hates the AOL HuffPo DealS

Maybe it's time for Armstrong, after two very rough years trying in vain to prove his executive mettle atop AOL. to hand the keys of the company over to queen in waiting Huffington. It's not clear what that would do for the bottom line, but it would certainly grow AOL's gossip output exponentially.

[Photos of Huffington and Armstrong via Getty]