Remember dial up internet? Remember Juno and NetZero? United Online(UNTD) owns both brands and

continues to generate cash flow from its legacy dial up business, though it continues to decline. The company has used this cash to pay a nearly 10% dividend, and to diversify its revenue stream by acquiring other businesses.

Yesterday, United decided it was time to divide, and announced plans to spin off its FTD floral business to investors. The FTD unit, which also includes Interflora, is actually the bulk of the company’s business. In the most recent quarter, it accounted for $167.5 million out of $231.9 million in revenue, and around 2/3 of the operating income. The company hopes to complete the spin in the first quarter of 2013.

The company’s other two divisions are its Communications division, consisting of its legacy dialup business as well as some forays into branded DSL and wireless, and its Content & Media business which consists of brands such as MyPoints and Classmates. The company also announced that it is exploring strategic alternatives for these businesses and it may also spin off Content & Media as an independent company.

The market likes the plan, as the stock was up 23% yesterday, the day following its announcement.

The company, which has long enjoyed milking the profits of its aging dialup cow, has seen the business decline to the point where it is no longer a driver. This is not surprising given the widespread adoption of broadband. The business should continue to support a high yield as its size declines over the next few years. Investors can see similar dynamics at play in AOL(AOL), another spin, which has used its dialup profits to expand into content, and a tiny microcap called Sitestar(SYTE), which Jeff Moore of Ragnar Is A Pirate has written about (and filed a 13D on), which has plowed profits from dialup into foreclosed real estate.

All 3 divisions are profitable, and breaking them up makes it easier to find strategic acquirers for these diverse assets. We agree with the market’s conclusion. This is a good move for the company and should unlock further value for shareholders.

Disclosure: The author holds shares in SYTE

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