When it comes to the Web there are really only four companies capable of being truly competitive in terms offering what television has to offer and more.
Yahoo! YHOO , Facebook FB , Google GOOG and AOL AOL .
Right now, there's not that much money that's earmarked for television going to the Web; maybe less than $4 billion.
But when it happens, and I think it will as the video qualities get better and better on the Web, the money will flow to these four.
Google's the most advanced on this. They've got a potential fermium model developing, very similar to Time Warner with its cable stations and its HBO iteration. They've got plenty of programming and, as it gets better, it will be a big party of its revenue drivers.
Yahoo!'s making strides toward doing this and Marissa Mayer knows this and I believe she has made this a priority because of the huge amount of eyeballs Yahoo has.
Facebook? It doesn't even have to plant the flag. It's the most natural channel of all because it has more than a billion users. My love of Facebook and its stock -- it is a charitable trust holding -- stems from the sheer number of untapped growth paths that lay before it.
Which brings me to AOL. Here's a company that disappointed and people are diving from, even though I think Tim Armstrong has made major changes that are almost all good. I think this is a selloff that has to do with a stock that had rallied so hard that it had to crush the numbers to stay on this treadmill.
But this is a company that has a terrific video franchise and is launching a Huffington channel that I think will be able to rival regular television. The ad dollars for video will be bountiful and while AOL's always managing the old and trying to bring on the new at the same time, it is going to slip now and then.
I believe that of the stocks in this column, AOL remains the most undervalued simply because its market cap at $2.8 billion is just too small to contain the opportunities here, especially given that it is generating cash and it has a proclivity to buy stock.
Keep in mind that in just the last two years Armstrong has bought back almost a quarter of the shares outstanding and he still has $468 million in the bank to buy more.
I believe this dip is precisely the kind of dip that AOL will use to buy more stock, even as it has a $32 average on what it bought last quarter. That's because, while Wall Street thinks that AOL isn't doing that well, Armstrong's confidence will translate into more stock to be bought right here right now.
Two trends are defining the Internet right now: desktop-to-cellphone migration and high-quality video. If you have them both, you are going to succeed as dollars come from television to the Web.
Google, Facebook, Yahoo and AOL have that combination. They might turn out to be the ABC, NBC, CBS and Fox of the future. That means when they come down you have to buy them, including AOL, on what looks to be a disappointing quarter, but which I believe is just a speed bump.
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