As usual, serial entrepreneur Jason Calacanis makes lemonade from lemons–or is it vice versa?–touting cost-cutting at his human-powered search engine start-up and newest venture, Mahalo, almost as much as he touted its prospects when he started it up more than a year ago with $20 million in funding.

The colorful Calacanis has been around the Web space for a long time, with a range of ventures back in the day, like “Silicon Alley Reporter,” up to the last of which–Weblogs Inc.–was sold to AOL in 2005 for $25 million.

But in a blog post yesterday, Calacanis sang perfectly in tune with the new, decidedly grimmer, times. Thus, he announced the cuts at Mahalo, which include layoffs, with his typical showman style.

The venture was funded by–among others–Sequoia Capital and its wunderkind VC Roelof Botha.

But, after Sequoia lowered the boom on the start-ups it invested in recently, it’s no surprise they are lining up to show how well they can play “Survivor.”

Wrote Calacanis, in part:

Although we’ve got a significant amount of cash on hand, and the business is ahead of schedule in terms of traffic (4m uniques a month, double where we thought we would be at this point), we’re fairly certain that the advertising climate for the next two years will be severely depressed. To ignore this obvious fact would be irresponsible…While I anticipated and prepared for the ‘internet winter’ we’re now facing (you’ve read my posts and e-mails about the startup depression I’m sure), I failed to realize how bad the situation would get. It’s much worse than I thought it would be, and ignoring market conditions today would only mean deeper cuts down the road.”

Ah, for happier times, such as in these three videos of Calacanis, which I shot when life was quite a bit sunnier.

The first two are of my visit to Mahalo’s Santa Monica, Calif., HQ last summer (tony digs and giant screens for all) and the third is the video from when Walt Mossberg and I demoed Mahalo at the fifth D: All Things Digital last year.

Now that the plot has inevitably thickened, it’s interesting that Mahalo means “thanks” or “gratitude” in Hawaiian. And BoomTown is surely thankful for the ongoing drama that Calacanis brings to the Web.

Here are the videos:

Visit to Mahalo:

Interview with Calacanis:

Mahalo Demo at D5:

Back in the first season of “Saturday Night Live,” one running catchphrase uttered by Chevy Chase would always crack the then-12-year-old BoomTown right up: “This breaking news just in: Generalissimo Francisco Franco is still dead.”

It’s that same kind of extreme déjà vu I feel with the continuing drip-drip-drip of the news-less news that Time Warner’s AOL and Yahoo are still talking about a merger.

Both Silicon Alley Insider’s (and soon-to-be AllThingsD.com blogger) Peter Kafka and I wrote extensively about the talks on in mid-September, noting that the discussions centered around merging AOL’s content, advertising and software assets with Yahoo (minus the access business).

There were the price issues–Yahoo wanted to pay between $6 and $8 billion, while Time Warner has long wanted $10 billion–as well as the worries about integration (East Coasties versus West Coasties) and email dominance monopoly problems.

As I wrote on Sept. 23, for example:

That support will be especially important if Yahoo tries to buy AOL, which it is again strongly considering as a way to bolster its ad business, international portfolio and email and content offerings.

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.

Yang had been pinging a lot of execs over the last year and has had little uptake.

But a stronger and more flexible Yahoo–i.e., it knows it has to change dramatically–would surely be more enticing, especially in a down economy.”

Now comes yet another story yesterday from TechCrunch that the talks are–wait for it–still on.

The story recounted similar details and added even older ideas from previously reported AOL-Yahoo talks (some multi-billion-dollar cash infusion from Time Warner, for example).

And, said TechCrunch, it could happen this month!

Good gracious–October is, like, a really long month. And, if not October, I guess November is good or maybe December. Hey, what about 2009?

Actually, what everyone really would like to know is what the heck is taking Time Warner (TWX) and Yahoo (YHOO) so long, hashing over the same issues (price mostly), especially if it is such a stellar idea?

And, with the economy crashing all around and Yahoo’s and Time Warner’s stock hitting five-year lows, one has to wonder what, exactly, the pair are waiting for?

A more fortuitous reading of the entrails? A sign from the heavens? Better winds?

Well, I hate to inform Time Warner CEO Jeff Bewkes and Yahoo CEO Jerry Yang, but the tide is not turning anytime soon, and both their companies are getting weaker by the minute.

I once called the pairing of AOL and Yahoo a little like leaning two drunks against each other to keep them from toppling over.

Looking back, I will admit that was a little harsh.

Given the stakes now, though–and especially if Yahoo has to abandon its controversial search ad outsourcing deal with Google (GOOG)–it makes sense to combine forces.

In the online ad space, for example, Yahoo and AOL mostly complement each other. The same is true in email and communications tools. And, while Bebo is not the prize Time Warner touted it as, despite paying a king’s ransom for it, Yahoo has no social-networking property.

The only area of true overlap is in content. Here, based on many sources, I would imagine if a deal is ever struck that Yahoo will slash and burn most of AOL-branded properties, keeping only interesting newer brands like sports blog FanHouse, celeb blog TMZ and the Engadget, Tuaw and JoyStiq tech blogs.

And, in fact, if the pair even gets its act together–this or next week would be great for us–it will give them the much-needed impetus to start making the massive cuts needed at both Web outfits for a long time now.

In that regard, look for an AOL exec like its President Ron Grant to be buttonholed to swing that particular ax.

Yahoo, with its less confrontational culture, has never been good at that kind of thing. For all its many flaws, it is a talent AOL will surely bring to the party.

If, of course, Yahoo and AOL ever manage to throw one before they become too much like Generalissimo Franco.

You know: Still dead.

There have been a plethora of reports over the last week about what is happening at Yahoo in relation to layoffs.

As regular readers of BoomTown know, cutting staff is one thing we have suggested as something many think the Internet giant should do more of, perhaps even in a dramatic way, even though Yahoo has also seen a steady stream of employees leaving the company.

But although layoffs are getting a lot of attention, expect the changes to be less bold than has been reported, much in the same way CEO Jerry Yang has been handling other changes at Yahoo–slow and decidedly nondramatic.

In other words, sacred cows are still safe. For now.

“It is more like moving people around than anything to areas that are more promising,” said one top exec at the company of its 14,000 employees.

In other words, maybe several hundred jobs cut rather than the 1,200 or more reported by Silicon Alley Insider last week.

Cutting costs is a good idea, of course, especially since the company is not as productive per employee as competitors like Google.

And Wall Street, where Yahoo shares have been languishing, would love a big, juicy cut in the company’s employee base to jack up profits in the short term.

In addition, when pressed, most execs at the company still complain of too many high-level execs–which I once called the “attack of the Yahoo vice presidents.”

Said one exec to me a few months ago: “There are too many chiefs and not enough people who get things done.”

To be fair, most agree that that problem has improved at Yahoo since Yang and President Sue Decker have focused on streamlining the executive ranks, which has been welcomed.

But Yahoo can’t cut itself into greatness. So, expect more movement of current employees in arenas where Yahoo can excel. That means toward things like mobile, communications, email and its graphical ad network.