Yahoo rumored to be in AOL talks

Just when I thought it was safe to head for the bar comes news, courtesy of our colleagues over at the Wall Street Journal, that Yahoo and AOL are working on a deal to combine the two companies' Internet operations.

"The possible Yahoo-AOL tie-up is part of a threefold plan by Yahoo to present shareholders with an alternative to Microsoft's unsolicited offer. Yahoo would also propose repurchasing billions of dollars of its own shares and is negotiating with Google Inc. about an advertising tie-up, people familiar with the matter said."

Say this much for Yahoo CEO Jerry Yang: He's giving it the old college try--anything to make sure he doesn't wind up reporting to Steve Ballmer. Earlier in the day, Yahoo said it was testing the use of Google advertisements on some of its search pages.

The WSJ story correctly raises the possibility that this may all be a negotiating ploy to squeeze a higher price out of Microsoft. If that is the case, Microsoft isn't letting on just yet--at least not publicly.

Reached for comment, a spokesman repeated Microsoft's earlier statement by the company's general counsel, Brad Smith. "Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers."

[Dead Soulman]

Wasn't the AOL merger what killed the Warner stock? Now they're going to try it again killing whatever it's left of Yahoo.

[JCPayne]

Yes.... And wasn't AOL and Time Warner merged because their crazed shareholders expect companies to turn profits too fast???? MUCH like how Yahoo and Microsoft shareholders want them to merge even though most of their business overlaps and would likely just lead to mass-confusion and a two companies trying to fit their parts together esp. when they don't really fit together.... Yahoo-Microsoft would be another AOL-Time Warner or G4-TechTV merger all over again. It'll crumble within months.

[dadsgravy]

Mmmmm... Goes together like peanuts and poop!

[Bill Thielman]

This sounds a LOT like the 2002 merger of Compaq/HP. "Fits like a zipper" was what former CEO Fiorina said. She was completely wrong, of course, and it took nearly five years for the integration of the two companies. The business overlaps were - and still are, to some extent - that HP still makes heavy use of the Compaq logo, and hasn't been able to handle the wildly different corporate cultures of the two. Mark Hurd had to make a lot of tough decisions to finish the integration, after the mess that Fiorina made. BTW, heard on the news that she may be on the list of McCain's possible running mate. EWWWWW!