What Will AOL Do with More Than $1 Billion?

Earlier today, AOL (NYSE: AOL) announced that it will sell over 800 of its patents to Microsoft (NASDAQ: MSFT) for $1.056 billion. Microsoft will also license more than 300 additional patents and patents applications from AOL.AOL said that it is expecting to return a significant portion of the proceeds to its shareholders, which is a big reason why the stock is up 45% today. According to the company's statement, "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."Benzinga contacted Thomas Forte, who is an analyst at Telsey Advisory Group and has been covering AOL since 1996. His prediction is that AOL will most likely return the proceeds to its shareholder in the forms of a share buyback and special dividend. When asked about the possible acquisitions, such as the Huffington Post acquisition year ago, Forte mentioned that AOL will potentially use resources to improve and expand its local news site, patch.com. Overall, Forte's thoughts were that AOL's management has done a good job divesting patents that it does not need in its operations.Traders who are looking to profit from today's deal may want to take a look at other companies that are holding extensive patent portfolios, such as RIM (NASDAQ: RIMM).You can follow me on Twitter @TuomoKallio.