Like BoomTown Said: Yahoo-AOL Talks on Again (But Now It’s Official)
by Kara Swisher
Posted on September 24, 2008 at 8:44 AM PT
While it was somewhat breathlessly reported that the Yahoo board had “authorized” a plan to talk to AOL about a possible merger yesterday, it’s just a rubber stamp of what has already been going on.
In other words, you don’t need a leak by new board member Carl Icahn to point out the obvious and give it the official nod of approval.
Because neither Yahoo (YHOO) CEO Jerry Yang or Time Warner (TWX) CEO Jeff Bewkes actually has a lot of options.
Both face a rocky next year in the online advertising business, especially in the display business, in which each has more to lose.
Thus, the pair–in a lot of different ways and through a variety of public hints–have been dancing around each other again for weeks now.
As I posted Monday, Yahoo has been looking again at AOL as an important strategic move and as a way to bolster its ad business, international portfolio and email and content offerings.
As I wrote:
Several sources I have spoken to recently have said that Yahoo leadership is very interested in doing such a deal, although not at the $10 billion price tag that Time Warner wants. (Think half and add a little more.)
In addition, there are some daunting regulatory and integration issues–AOL and Yahoo email and messaging combo would be a giant in the space, and the HQs of the companies are on opposite coasts.
But, the deal would give Yahoo some more experienced executives it needs and make it more attractive to others who might not consider going to Yahoo in its present state…
In addition, such a move–which was once opposed by some Yahoo execs–would now be seen as injecting energy into the company.
A Yahoo-AOL combination, however fraught, would still be a powerhouse, which would be bolstered by the 5 percent ownership Google has in AOL and its search partnership with the company.
Of course, that deal would doubtlessly get a lot of scrutiny, especially since Yahoo’s and Google’s impending search-ad deal is under pressure too.”
Let me reiterate what I said above–this is a last-ditch, Hail Mary effort, in the hopes that one plus one will equal something significant, even as the digital sector and the online ad industry it relies on contract in the current economic climate.
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Comments
I was an AOL user, I loved it prior to the internet, browsers, an broadband.
When we got the net, broadband, and real ISP’s, it became apparent to me that AOL never had a broadband strategy. They were shut out by localized broadband providers like cable companies, telephone companies and the like.
Yahoo’s superiority was because they never claimed to be a real portal, just a good navigator.
AOL stuck with supporting their dial-up too long because it was a cash cow for Time-Warner. By the time they decided to be a web based group like Yahoo, it was too late. They were crowded out.
I had AOL stock and made a good amount of money on it, and got out of it, with at least a 25 bagger.
I also had Yahoo, and Microsoft helped me get out of that with a triple by offering to buy the company. Yahoo is dead from the neck up. Like AOL, they are coining money. But they have no where to go.
If Yahoo buys AOL, it is the blind buying the stupid.
Posted by Richard Mitnick at September 24th, 2008 at 10:31 am