AOL in $1bn patent deal with Microsoft Shares in AOL soared 46pc to $26.86 in New York on news of the deal, as the company said it intended "to return a significant portion of the sale proceeds to shareholders." Wider US markets retreated as they had their first chance to react to last week's weaker-than-expected jobs data. The Dow Jones Industrial Average fell 0.81pc to 12,954.03. AOL said it would retain more than 300 patents and patent applications related to technologies including advertising, search, mapping and social networking. It had granted Microsoft a non-exclusive licence to this portfolio. AOL also received a licence to the patents it was selling to Microsoft. Tim Armstrong, AOL's chief executive, said: "The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio." Brad Smith, Microsoft's executive vice president for legal and corporate affairs, said: "This is a valuable portfolio that we have been following for years and analyzing in detail for several months." AOL was considering how best to return cash to shareholders. It said: "Pro forma for the sale and license, as of December 31, 2011, AOL would have had approximately $15 per share of cash on hand." AOL said cash taxes on the sale should be "immaterial" because it included the sale of the stock of an AOL subsidiary on which it expected to record a capital loss for tax purposes.