Oct 29 2006
Yahoo to Buy a Sinking Ship?
From the No F’ing Way department:
Yahoo must have a new appreciation of how Burger King feels about McDonald’s: Constantly looking up at No. 1 gets vexing. So it should come as no surprise that Yahoo’s chairman and CEO Terry Semel is mulling a number of moves that would impress Wall Street and steal the spotlight from the Google behemoth.
FORTUNE has learned from multiple sources that Yahoo (Charts) recently approached Time Warner (Charts) (parent of FORTUNE’s publisher) about buying America Online - essentially trying to jump-start talks that broke down a year ago. A source close to Yahoo disputes that Yahoo approached Time Warner and says that there are no active conversations between the two companies. Regardless of which version is correct, a Yahoo-AOL merger would be a face-saver for Semel: Last year Google (Charts) outflanked Yahoo and swooped in to become AOL’s exclusive Internet search provider, picking up a 5% stake in AOL for $1 billion as part of the deal.
I’d have to say that would be the dumbest move in the history of Yahoo!. Okay, maybe the second dumbest behind buying Broadcast.com for $5.7 billion.
Why would anyone want to own AOL at this point? They’re a company that’s completely lost direction, lost a ton of subscribers, and lost the respect of most of the people that once had any for them. This is not a company any smart person would want to own or be associated with.
If Terry Semel is that desperate to find something to buy, he should set his sights a little higher.
Like on a sewer. Anyway Yahoo has a few options, according to Time Warner-owned (and not disclaimed in the article?) CNN:
• Buy AOL. Swallowing AOL won’t transform Yahoo, but would give it increased traffic and a shot in the arm for its search-advertising business. The real question is whether Time Warner wants to sell. “Time Warner has a new strategy for AOL and is not contemplating any deals,” says a company spokesman. Citigroup analyst Jason Bazinet estimates AOL is worth about $13 billion. Of course, Time Warner might demand more.
Pft… Whatever dude.