Yahoo and AOL?

So the internets are reporting that Yahoo is reviving its AOL merger talks to try and stave off the Microsoft takeover. Turns out the blogoweb hates this. Personally, I think it’s fairly unlikely to happen just like last time, although perhaps not, given that Time Warner’s thinking about splitting AOL in two and IPO’ing them - Yahoo could pick up the advertising network and be in good shape.

Honestly, I don’t know why people hate the idea so much. First, if the alternative is the Microsoft cluster, do people really think this is worse? Techdirt says Google’s probably laughing all the way to the bank - why would they do that? AOL represents a huge advertising source for them - so much so that they invested $1 billion in them just on the threat that Microsoft was going to acquire them and take away that revenue. At a time where ad revenue may be contracting or at least not expanding at the rate Google needs to sustain it’s historic growth rate, why would they laugh at the thought of losing a huge advertising network?

That AOL isn’t really a technology company is a bonus in this case - the purchase of AOL would simply be about getting scale, there would be little in the way of competing technologies and integration to mar the purchase like there would be in a Microsoft/Yahoo linkup. It would save Yahoo (and Microsoft) from the slow death that that merger would create, it would give Yahoo a little more scale for it’s advertising platform and it’d ding Google a bit all in one fell swoop.

If there were no Microsoft threat on the horizon, I’d probably think a lot less of this idea but given the current situation I certainly think it is well worth investigating. Depending on the price, this could be just the ticket. While it may not boost the stock value short term, it has a significantly brighter long term future than the Microsoft alternative.

Feb 11th, 2008 · Comments RSS · · · · · Tags: m&a · microsoft · yahoo