We were aware that activist fund Starboard Value wasn’t exactly a fan of the way AOL CEO Tim Armstrong and co run the aging Internet giant, but this ‘investor presentation’ filed with the SEC yesterday is still a must-read (embedded below).

Update: and they just issued a press release about it, too.

In just south of 100 slides, Starboard throws tons and figures, analysis, charts and survey results at AOL’s flailing operations (Patch and its Display business in particular), less-than-stellar financial performance and – lack of – a coherent strategy to turn things around.

They also go quite far in trashing Tim Armstrong and incumbent board members personally. Armstrong, for what it’s worth, disagrees with Starboard.

The fund, which owns about 5.3 percent of the Internet company, has three new nominees lined up to take seats on its board of directors, and promises to fix things should they be elected at AOL’s upcoming 2012 Annual Meeting (to be held on June 14).

As I said, it’s well worth a look.

Starboard Value, a major AOL shareholder with approximately 5.3% of the company’s outstanding shares, has been making a lot of noise lately with its complaints about AOL management’s strategic, financial and product decisions, as well as the stock’s lackluster performance.

If you thought the activist fund would back off now that AOL turned much of its intellectual property into dollars by selling 800 and licensing 300 patents to Microsoft in a $1 billion+ cash deal, you might want to reconsider.

Starboard this morning published a long letter to AOL’s board of directors, in which it commends and applauds them and the company’s management for taking a “meaningful first step in unlocking value for AOL shareholders”.

And then, of course, come the stings:

However, the announced sale of the patents does little to address our serious concerns with the Company’s poor operating performance and substantial losses in the Display business. We estimate that AOL’s Display business is currently losing over $500 million per year, including $150 million in Patch alone.

Patch is an unproven and, thus far, unsuccessful business model that is draining valuable resources from the Company.

Unfortunately, to date, management and the Board have been unable to meaningfully improve profitability in the Display business and unwilling to consider alternative strategies to realize value from these assets.

Conversely, recent public comments by management demonstrate that AOL remains committed to the status quo in its Display business – which we find unacceptable.

For your information, Patch is a platform of now over 850 hyperlocal news, information and engagement sites acquired by AOL in 2009.

Starboard adds that the “underperforming Display business appears to be substantially weighing down AOL’s potential valuation” and blasts the company’s “dismal track record of capital allocation”.

Pro forma for the patent sale, we estimate that AOL will have approximately $1.43 billion of cash, or $15.35 per share. This represents more than half of the current market capitalization.

AOL has a dismal track record of capital allocation, having spent $2.3 billion on acquisitions since 1999 and recording a goodwill impairment charge of approximately $1.4 billion during 2010 alone.

Yesterday, AOL said it would “return a significant portion of the sale proceeds to shareholders”, but that’s not going far enough for Starboard, which thinks the company should be returning all of them.

Starboard also says it intends to file preliminary proxy materials with the SEC for the election of directors to the AOL board at the upcoming 2012 Annual Meeting, as “the announced sale of AOL’s patents does not address the need for substantial improvement in the operating performance of the company”.

Starboard, founded in March 2011, was created through a spin-off transaction from Ramius, the investment management subsidiary of the Cowen Group.

Expect AOL to respond to them promptly, painting a much more beautiful picture.

(Note: AOL was my employer until very recently)

Huge news this morning: Web services giant AOL (note: my employer until very recently) and Microsoft have struck a deal that will see the former sell more than 800 of its patents to the Redmond software juggernaut. In addition, Microsoft will (non-exclusively) license more than 300 additional patents and applications.

Aggregate proceeds of the agreement is a whopping $1.056 billion, in cash.

At December 31, 2011, AOL had only $407.5 million of cash. Pro forma for the sale and license, as of December 31, 2011, AOL would have had roughly $15 per share of cash on hand, it said. Its market cap was $1.75 billion at the last market close.

According to the terms of the deal, AOL will retain over 300 patents and patent applications spanning technologies for advertising, search, content management, social networking and mapping, among others, following the sale.

AOL also received a ‘perpetual’ license to the 800 patents being sold to Microsoft.

AOL expects the deal, which includes the sale of a subsidiary on which AOL expects to record a capital loss for tax purposes, to be completed by the end of 2012, pending satisfaction of customary conditions and regulatory approvals.

Update: AllThingsD says the subsidiary in question is … Netscape.

For some insight into AOL’s overall intellectual property, check Envision IP’s recent dive into its patent portfolio (see screenshot below, via AllThingsD).

Tim Armstrong, AOL’s chairman and CEO, in a statement said the deal with Microsoft is “the culmination of a robust auction process” for its patent portfolio.

Armstrong had been pumping up AOL’s patent trove in public to anyone on Wall Street who would listen a lot lately, as recently reported by AllThingsD.

It’s not surprising that AOL sought to monetize its patents in some way, with pressure from shareholder Starboard Value and others mounting of late.

Now that AOL has turned a great deal of its patents into dollars, a transaction that it says is “tax-efficient” and will result in a significant return to shareholders, it’s worth asking the $1.056 billion question: what is Microsoft going to do with these patents?

(Sidenote: Microsoft is an investor in Facebook and a partner of Yahoo – both companies currently embroiled in bickering over social networking patents.)

Full press release (AOL subsidiary TechCrunch also published its memo to staff):

AOL and Microsoft Announce $1.056 Billion Patent Deal

AOL to sell more than 800 patents to Microsoft; Microsoft to license more than 300 additional patents and patent applications from AOL

Transaction is tax-efficient for AOL

Upon closing, AOL expects to return a significant portion of the proceeds to shareholders

NEW YORK–(BUSINESS WIRE)–AOL Inc. (NYSE: AOL) (the “Company”) today announced that the Company has entered into a definitive agreement to sell over 800 of its patents and their related patent applications to Microsoft Corporation (NASDAQ: MSFT) (“Microsoft”) and to grant Microsoft a non-exclusive license to its retained patent portfolio for aggregate proceeds of $1.056 billion in cash.

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio”

Following the sale, AOL will continue to hold a significant patent portfolio of over 300 patents and patent applications spanning core and strategic technologies, including advertising, search, content generation/management, social networking, mapping, multimedia/streaming, and security among others. AOL also received a license to the patents being sold to Microsoft.

The patent sale includes the sale of the stock of an AOL subsidiary upon which AOL expects to record a capital loss for tax purposes and as a result, cash taxes in connection with the sale should be immaterial. Additionally, AOL expects to utilize approximately $40 million of its existing deferred tax assets, representing approximately 20 percent of its total deferred tax assets, to offset any ordinary income taxes resulting from the license of its remaining patent portfolio.

AOL management and its Board of Directors intend to return a significant portion of the sale proceeds to shareholders and will determine the most efficient and effective method to do so prior to the closing of the transaction. Pro forma for the sale and license, as of December 31, 2011, AOL would have had approximately $15 per share of cash on hand.

“The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio,” said Tim Armstrong, AOL’s Chairman and CEO. “We continue to hold a valuable patent portfolio as highlighted by the license we entered into with Microsoft. The combined sale and licensing arrangement unlocks current dollar value for our shareholders and enables AOL to continue to aggressively execute on our strategy to create long-term shareholder value.”

“This is a valuable portfolio that we have been following for years and analyzing in detail for several months,” said Brad Smith, General Counsel and Executive Vice President, Legal and Corporate Affairs, Microsoft. “AOL ran a competitive auction and by participating, Microsoft was able to achieve our two primary goals: obtaining a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

The transaction is expected to be completed by the end of 2012, upon the satisfaction of customary conditions and regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Evercore Partners and Goldman Sachs acted as financial advisors and Wachtell, Lipton, Rosen & Katz and Finnegan, Henderson, Farabow, Garrett & Dunner acted as legal counsel to AOL in connection with the transaction.

The social profile network About.me, which was acquired by AOL in 2011 is continuing to expand its usefulness with a new iOS app that makes interacting with people easier.

About.me for iOS displays your profile beautifully on your device as well as tag people as favorites and find people that are close-by. We haven’t heard much from the product as of late, but it’s clear that AOL is not done adding functionality to it.

If you don’t already have an About.me account, which serves as a virtual business card for you, you can sign up from within the app or just login to your existing one.

On the main screen, you’ll be shown featured profiles much like you are on the current site:

As you dig a bit deeper into profiles, you’ll notice that you can share the people you find on Facebook, Twitter, or via email. This is neat if you’re looking for a new designer to hire at your company and want to exchange notes on potential recruits:

Since you can plug all of your social accounts up to the service, like foursquare, Tumblr, Twitter, and Facebook, it’s a good way to socialize with new friends as well. The app also lets you update your own account information quite easily.

The new functionality, called “Who’s Nearby?”, is more of a feature we’d see in an app like Highlight, allowing you to explore the network of folks who have a profile based on where they’re located. This is an ultra-social feature and it’s interesting to see AOL taking the product in this direction, since there’s already a lot of competition:

For me personally, I don’t use the site as much as I used to. It was fun at first to change your “cover photo” which is a beautiful high-resolution profile picture, but once you’ve connected all of your services, there’s not much of a reason to go back to it. It’ll be interesting to see if this new app kicks up interactions between users, or drives anymore traffic to the blogs that are hooked up to it.

➤ About.me for iOS

Oh, AOL. The company that opened the gates to the Internet for so many of us has definitely had its troubles as of late. It’s sad to see what is going on at the company, especially since products like AOL Instant Messenger were commonplace for so many of us “back in the day”.

As Nick Bilton from the NYT reported this week, the AIM team has been gutted with over 40 people losing their jobs. One of those leaving is Jason Shellen, AOL messenger product’s vice president.

With that heavy news hitting the Internet, some called it the death of AIM. That was technically incorrect and AOL released this statement on the matter:

We are not killing instant messenger. We’ll continue to support it and evolve the product.

Unfortunately for AOL, AIM is already dead. Suggesting that the company would “evolve” the product is a load of crap, considering that the product hasn’t evolved at all over the years coupled with the fact that it just axed the entire team that works on it.

Support the product? Sure. The company will continue to answer emails about why poor users can’t log in and provide them with a link to reset their password. But that’s about it because once again for AOL, the ship has sailed on yet another opportunity to stay relevant.

Over the years, chat has become a feature and not a product. To create a product built solely around chatting you’d have to make it a damn good one. Sadly, AIM was never really that good. It’s still alive though because over the years it became the Internet address of choice for users as they gave their username out to friends, family, and colleagues. It’s like an email address, nearly impossible to move away from.

But like all addresses, they change in the future as we grow and up want more from the place we call home. AOL had a really great shot to build a fantastic house. Signups and eyeballs were never a problem for the company or the product and users never saw a reason to try something else. Once Gchat and Facebook came along though, it was all over.

One of the most discussed products at conferences and geek meetups I go to is AIM. Not because it’s great, but because of what it could have become. Had AOL decided to put some muscle behind it with a new name, great marketing, and an updated feature-set, it could have been a monster. It could have been something that Facebook would be integrating, not moving users away from.

AOL had a chance to be the chat tool on the web and mobile, especially since it was the first app that let you message people on a mobile phone via text message. That’s right, all of those text messaging apps out there copied a really cool AIM feature. I’m glad they did because AOL never promoted it themselves.

You really humped the hamster on this one AOL, but don’t try to fool us into thinking that you’ll start caring again by evolving, because you never cared to begin with.

When it comes to searching for things on the web, everyone goes about it in a different way. For example, I still know people who search for “YouTube” on Google instead of typing ‘www.YouTube.com’ into their search bar. Crazy, right?

Data analytics firm Chitika did some interesting research into how many words users type to perform searches on the top five search engines.

The search engines include Google, Bing, Yahoo, Ask, and AOL. Chitika found that Ask.com users tend to type in the most words when searching, while AOL users type the least. The graph below is based on search engine traffic this month from North America.

It’s likely that the wordiness of Ask users are due to the fact that the site wants you to ask questions in natural language format, but this study is interesting none the less.

With most search engines providing auto-completion in their searchbox, it will be interesting to see if the total number of words people perform each search with drops, since the suggestions will override their natural predilection of being verbose.

One of my favorite things to do online is chat. Real-time chats haven’t been done well since the old aol chatroom days where you could enter a room based on the city you were close to, or an interest that you had.

Since aol, apps like Yobongo have tried to bring chat back with real-time serendipitous chats based on your location.

Today a simple app called “Sirkel” was released.

Set your chat Sirkel

By dragging the slider up and down on the right hand side of Sirkel, you can choose how much of the world you’d like to chat with. Your default circle is set to 3 miles.

You log in with your Facebook account, and the app asks you for your location. Once you get going, it’s kind of neat to see new people pop up on the map.

Chatting through your browser

Since Sirkel kept things simple, there is nothing to download. By clicking the photo above the red dot when someone pops up on the map, a chat is started with them. The chat interface is clean, and lays nicely on top of the map.

I could see leaving Sirkel up on my extra monitor, glancing at it once in a while to see if anyone is active. What we miss on Twitter and Facebook is real-time interactions with people that we don’t know. While this might not be something for everyone, it is a nice way to chat outside of your normal circle.

Considering that you can drag around the map, it will be interesting to see which areas embrace Sirkle, if any. The only downside to Sirkel is that there is no “friends list”, so if I chat with someone I have to remember their name, otherwise it’s likely that we’ll never talk again.

Try chatting outside of your default 3 miles, and see who you meet! Since the app requires you to login with Facebook, Sirkel won’t end up being rowdy or crude, since peoples real names are coming along with the incoming chat requests.

With most businesses deciding that it’s time to have a Twitter account, Facebook page, and a blog, the need to bring all of these things into one place is necessary. About.me let individuals create a beautiful “home” page with links to all of their social media accounts. JustAbout.co is doing the same thing for your company or product.

JustAbout.co has given The Next Web an exclusive invite code, so sign up today.

JustAbout.co was founded by Ludo Antonov and Arianna O’Dell due to the simple need of providing companies of all sizes an easy way to set up a website.

According to the company:

JustAbout.co integrates with the social networks that matter most to your line of business. After you’re done customizing – easily aggregate your social channels. Networks are grouped in categories, making it easy to find and add the networks in your industry.

This type of service is most certainly necessary as managing a website dynamically for most companies is a thing of the past. Hiring someone just to update every single happening for a business is just too costly and social media cancels out the need for that.

Quick setup

Setting up your JustAbout.co page is simple. Just enter in all of your details, add links to your social networking accounts, and the site saves your changes on the fly. If you’ve ever used aol’s About.me, you’ll be very familiar with the interface.

Why I find this interesting, is the reason that most might find it not so useful. About.me is for people specifically, a place to build your personal brand, and all of its services are tailored for that. I saw companies using the service to create pages for themselves and they always looked out-of-place.

What JustAbout.co can do if it stays focused on the business end of things, is create a solid offering to a huge userbase of companies. Having a network of hosted pages works for the company, and for the users in the same way that hosting a WordPress blog on WordPress.com does. This approach means all companies will benefit from sweeping changes and upgrades made to the site. Hopefully JustAbout.co will offer a directory of companies, because I feel like a second generation yellow pages is something that’s needed on the web. Open search just doesn’t always cut it.

Be sure to grab your companies’ username on JustAbout.co and use the special invite code: #TNWFTW

Last night, I attended a gathering of some of the smartest technology minds focusing on Education for grades K-12. I didn’t know what to expect, other than Newark Mayor Cory Booker and LinkedIn‘s Founder and Chairman Reid Hoffman being there to listen to seven companies from the ImagineK12 startup incubator in Palo Alto.

In a small office within the Palo Alto aol building, teams with big hearts (and sometimes very nervously) discussed their views on the future of Education for children all over the world.

I’m going to be doing a few interviews with some of the companies in the near future, which include Goalbook, educreations, and Eduvant. This is a space that I’m very passionate about.

Each team had one thing in common, their belief in the importance of technology to make change happen in a system that hasn’t changed in decades.

That change could very well come out of the ImagineK12 incubator, which says this about itself:

We believe technology is transforming K-12 education. The infrastructure, hardware, software, and platforms are either available or being developed that will change the nature of how we teach our children in profound and far-reaching ways. A high-tech wave is beginning to sweep through the educational world largely driven by technology entrepreneurship. But the impact of those entrepreneurs will depend on the quality of their ideas, their ability to execute, and their ability to get funded.

Imagine K12 is a for-profit enterprise looking to invest time, experience, energy and resources in entrepreneurs who have a passion for education and the technical know-how to create their vision. Over a three-month period, we will draw on our extensive entrepreneurial experience, understanding of the Silicon Valley ecosystem, and knowledge of the education industry to help bring your idea to life, get your company funded, and to get your company on the road to success.

Last night wasn’t a pitch session for funding, although I’m sure most of the startups hoped that Reid Hoffman would take interest, as he is an extremely prolific VC now. Most of the nearly three hours were spent on presentation of the products, and Q&A by Mayor Booker on the nuts and bolts of education, and business advice and guidance from Reid Hoffman. For these companies, this type of audience is nearly unheard of, and each one took notes and paid full attention. And of course, vice versa.

Newark Mayor Cory Booker shared that he can no longer watch the way school systems have worked, there has to be change. Technology, he believes, can bring that change.

The theme of the night appeared to be data. Educational institutions have a huge flow of data, some not even digitized, and have no way to pour through it to make smart decisions for their schools or more importantly for their students. Some of the companies have come up with ways to use data to incentive students with behavioral issues, make better use of a Principal’s time by giving them a dashboard of student and financial data in real-time, as well as share lesson plans all over the world.

A few of these companies seemed to intrigue both Booker and Hoffman, causing Booker to set up meetings between the companies and schools in Newark immediately.

Why isn’t there more of a focus on technology in education? Lack of money. Schools are notorious for having financial issues, even though technology can help with that, and there isn’t a steady flow of VC funds for those who want to focus their efforts on the education space. It seems as if ImagineK12 is set to change all of that, and having Booker and Hoffman involved certainly doesn’t hurt its cause.

Let’s also not forget that if we put more technology in schools, we’ll have more technologists like Mark Zuckerberg and Steve Jobs for years to come.

You can view more photos from last night below:

Facebook could be set to feature prominently in another movie as it has emerged that the screen rights to a new novel based around the social network have been sold to Warner Bros.

The Future of Us is a novel by Jay Asher and Carolyn Mackler which will be published in November this year. It tells the story of two young people in 1996 who log on to their AOL accounts, only – improbably – to see the Facebook accounts of their 2011 selves appear.

It doesn’t sound like it will have quite the bite of The Social Network, but whether or not the book and film’s plot grabs you, the news that Facebook could again be featuring prominently on the big screen shows the social and cultural impact it’s made in a relatively short space of time.

Of course, just because the film rights to the book have been sold doesn’t necessarily mean that it will ever go into production. Now, when’s the Myspace story being brought to the big screen?