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AOL, Yahoo Mulling Merger 136

Posted by Soulskill
from the do-i-get-a-vote dept.
Mike Zahalan writes with an update to last month's news that AOL and various private equity firms were exploring the possiblity of buying Yahoo. While talks between the companies have not officially gone much deeper, AOL has now hired financial advisers to analyze their options. Still, Kara Swisher writes at All Things Digital that the complexity of a deal between the two companies will be the biggest obstacle they have to overcome. "Among the issues being grappled with: Onerous tax implications around a variety of deals; a need for complete cooperation from too many players; and the realization that a hookup of AOL and Yahoo might cause more problems than it solves. 'It looks great conceptually and everyone gets all hot and bothered,' said one prominent investor who did his own strategizing about Yahoo and AOL. 'But when you actually do the numbers, you hit a pretty big wall of impossible.'"
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AOL, Yahoo Mulling Merger

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  • Why Merge? (Score:5, Funny)

    by MightyMartian (840721) on Monday November 08, 2010 @06:54PM (#34167606) Journal

    Because 0+0=1!

    • Re: (Score:3, Insightful)

      by Meshach (578918)

      Because 0+0=1!

      The merge will pump up all involved stock and make a lot of money for the stockholders. It may decimate the company's future but, as we learned from the SCO fiasco, that is a secondary concern.

    • Re: (Score:3, Funny)

      by couchslug (175151)

      "Why Merge!"

      It's a "user experience" experiment to create the proverbial Vortex of Suck, a horror calculated to make Cthulhu slouch away screaming in fear.

    • Re: (Score:3, Informative)

      by Pharmboy (216950)

      Because 0+0=1!

      But only for sufficiently large values of 0.

    • Because 0+0=1!

      For large values of 0?

      Seriously, if I worked at either of these companies I'd be looking to exit soon. AOL/Yahoo sounds like any remaining value will be gone long before the merger closes.

    • by MrEricSir (398214) on Monday November 08, 2010 @07:37PM (#34168030) Homepage

      When this was first news a while back I remember reading on Fark that this will merge "the site that your parents use with the site that your grandparents use."

      • by tehcyder (746570)

        When this was first news a while back I remember reading on Fark that this will merge "the site that your parents use with the site that your grandparents use."

        Well, hah hah hah, but in actual fact the idea of combining all those well off potential customers is not as stupid as you seem to think.

    • Yeah, I was wondering about that one too. Any conception I can come up with doesn't look good, so they must have much better imaginations than I do.
    • by magarity (164372)

      Because 0+0=1!

      In all fairness, the formula in this case is more like -5.0 (AOL) + 0.5 (Yahoo!) = -10.0

    • by RobNich (85522)

      0.3 + 0.3 = 0.6, which rounds to 1. So yes.

  • by swschrad (312009) on Monday November 08, 2010 @06:54PM (#34167608) Homepage Journal

    if you burn the money instead, it keeps you warm. if you buy Yahoo, you gain nothing.

    • by Miseph (979059)

      I think you're being a bit unfair to Yahoo! with that comment. They're clearly on the leading edge of innovating new and compelling business strategies designed to leverage their company even further into the abyss of irrelevancy. They must have gotten a lot of very bright, very creative people together to develop and idea that spectacularly stupid... it's almost like they're writing the script for their own "Pirates of Silicon Valley" or "The Social Network" corporate creationist Hollywood retrospective, a

  • Will it then be "AOHoo"?

    Oddly enough, it seems like Yahoo is mulling throwing away the same money Time Warner did. Never learn from others' mistakes, says us?

    • by MachDelta (704883)

      Gesundheit.

    • Re: (Score:3, Funny)

      by Genda (560240)

      Nope... it'll be named "yaHOL", and sound much like the yelling Governor Schwarzenegger makes the day after eating Habanero Peppers...

      Or perhaps its the sound of the black HOL formed when two infinitely dense, dying corporate stars accrete and collapse under the weight of their own ineptitude. This may well be the perfect opportunity to measure irony waves or maybe even determine the speed of stupid in a corporate vacuum.

  • by Shikaku (1129753) on Monday November 08, 2010 @06:55PM (#34167618)

    We'll call it Yaol (pronounced yowl) and call it a day because that's what the reaction will sound like.

  • What do they possibly have to gain? AOL is little more than an aged internet portal trading on legacy business from the not-too-bright.

    (Which I guess is what Yahoo is...)
    • by inKubus (199753)

      Yahoo actually has a pretty strong balance sheet. It's a well run company. They do a lot more than just portals, they have a nice strong tech arm. They sold off Zimbra for $500M to VMware. They have a strong base in Asia which is the fastest growing internet market. They are #2 in search and they have some other hot properties like Flickr.

      And as far as new stuff, have you seen YQL [yahoo.com]? Very cool stuff.

      However, they aren't trading at 30x earnings like Google and Apple because they aren't part of the "smart

      • by afabbro (33948)

        Yahoo actually has a pretty strong balance sheet. It's a well run company. They do a lot more than just portals, they have a nice strong tech arm. They sold off Zimbra for $500M to VMware. They have a strong base in Asia which is the fastest growing internet market. They are #2 in search and they have some other hot properties like Flickr.

        And as far as new stuff, have you seen YQL [yahoo.com]? Very cool stuff.

        However, they aren't trading at 30x earnings like Google and Apple because they aren't part of the "smartphone bubble" and they don't have a bunch of dumb money investing in them. The smart guys are going short on Apple after Christmas.

        Anyway, Yahoo's going to be around for a long time. Yes, they should have taken Microsoft's $50B when they had the chance but they will probably get another chance before this bubble pops.

        Hey, could you come redo our stadium? We're thinking of moving away from natural grass.

      • by magarity (164372)

        However, they aren't trading at 30x earnings like Google and Apple

        Check the figures before posting next time:

        YHOO $16/share, 21 P/E
        GOOG $600/share, 25 P/E

  • Wait... (Score:4, Insightful)

    by Stregano (1285764) on Monday November 08, 2010 @06:59PM (#34167674)
    AOL is still around outside of AIM? And they have enough money to buy another company?
    • by Psyko (69453)

      That's what I was going to ask, how do they even have money anymore? What do they actually do? Do people still pay them for some kind of portal service or is it all ad based revenue from aim or something?

      • by bhcompy (1877290)
        Yahoo leads in webmail still, has the #1 visited sports site on the net(more than ESPN or Fox), owns various strong web properties like Flickr, and is still #2 in search(which means #2 in advertising, basically). They also have excellent Finance and Fantasy sports sections
    • by xda (1171531)
      Ya cuz for years they charged people $9 a month for shitty email. when i was in my door to door computer fixer days I came across tons of people who had broadband but still paid AOL for providing no service other than a stupid home page and email
      • Re:Wait... (Score:4, Interesting)

        by Cwix (1671282) on Monday November 08, 2010 @07:20PM (#34167878)

        My old room mates parents still pay aol 10 dollars a month. The kicker is they have Time Warner broadband that they pay 50 a month for. Trying to explain this to them results in the deer in a headlight syndrome.

        They are also trying to repair their Pentium 2 computer, instead of taking the two year old Core2Duo that my old room mate tried to give them.

        • by Stregano (1285764)
          hansolo64@compuserve.com

          Compuserve. Yes, compuserve
        • by syousef (465911)

          My old room mates parents still pay aol 10 dollars a month. The kicker is they have Time Warner broadband that they pay 50 a month for. Trying to explain this to them results in the deer in a headlight syndrome.

          They are also trying to repair their Pentium 2 computer, instead of taking the two year old Core2Duo that my old room mate tried to give them.

          I can actually understand that. I find myself buying old stuff at closeout instead of the new model because I'm both familiar with the old, and it does some things better than the new. As an example I still have my Nikon D70 SLR even after having bought a D90 (2 generations ahead). The older camera has a flash sync of 1/500th vs (1/200th on the D90). In most other respects it is inferior, but that one feature allows you to do things you can't with the D90, albeit in very specific circumstances. So I can't b

          • by Cwix (1671282)

            They use it, if im not mistaken, because it has the same aol games they have always played. There is no mission critical app or functionality.

            The C2D was taken over to the house, hooked up in the same place as the old one. Just to have his dad call him the next day saying he didnt like it. I believe it even had the aol program installed on it, so they could play their favorite games.

            This would be like refusing to accept a Ford Mustang because the Pinto is just so comfy. Would you turn down that D90 if y

            • by syousef (465911)

              They use it, if im not mistaken, because it has the same aol games they have always played.

              That's actually a good enough reason, if those games can't be found elsewhere. I know a lot of people that spend more than $10 a month on gaming.

    • Re: (Score:3, Funny)

      by Captain Spam (66120)

      AOL is still around outside of AIM? And they have enough money to buy another company?

      Well, it IS only Yahoo they're considering buying.

      • by MachDelta (704883)

        I have $4.88 CAD in my pocket, can I get in on the bidding?

        • by JWSmythe (446288)

              I think we have a winner!

              Anything more, and the SEC will look into why a publicly traded company spent an unusually high amount on a worthless asset.

    • they bought netscape.
    • Think they got a fair few bucks selling their UK venture to Carphone Warehouse back in the day when they were still fairly large and forcing their starter CD's on you when ever you bought anything larger than a penny sweet.
    • by Ksevio (865461)
      Finally I'll be able to merge my AIM and YIM contacts into one list!
  • Death throes (Score:1, Interesting)

    by BadAnalogyGuy (945258)

    I remember when Yahoo! and AOL were the most important companies in their field.

    AOL was so big that they bought media giant Time Warner.
    Yahoo! was so big they were the homepage of over 90% of the internet-savvy population.

    The internet changed AOL so much that it became unrecognizable as that company that used to clog mailboxes with 3.5" floppies and CDs with their software. Google surpassed Yahoo!'s hierarchical solution with its ranking-based solution.

    Now both companies are in their final years, looking fo

    • The internet changed AOL so much that it became unrecognizable as that company that used to clog mailboxes with 3.5" floppies and CDs with their software.

      AOL became a useless company once they switched from sending out free reusable floppies to non-useful CD coasters. If they want to make themselves useful again in the 21st century, they need to get back to their roots and start mass mailing something we can use. Maybe free smartphones or something.

      • by Cwix (1671282)

        I vote free thumb drives.

      • by Macrat (638047)

        Maybe free smartphones or something.

        They should be able to get truck loads of Kin phones real cheap.

      • by Dogtanian (588974)

        AOL became a useless company once they switched from sending out free reusable floppies to non-useful CD coasters.

        Actually, they were useful... as coasters. No, really, I *did* use them as coasters(!) though neither they nor anyone else's ISP promo CDs ever actually encouraged me to sign up for anything.

    • by icebike (68054)

      And yet, Yahoo has more subscribers than Gmail. Or at least they were in 2009, the latest figures I can find.

      Microsoft webmail properties: 256.2 million users
      Yahoo: 254.6 million users
      Google: 91.6 million users
      AOL webmail properties: 48.9 million users

      Adding Aol to Yahoo would put them in the top spot.

      That being said, I agree with your basic premise that these two companies have nothing to offer, and merging won't help them unless they can monetize the combination, something neither has been able to accomp

      • by c0lo (1497653)

        And yet, Yahoo has more subscribers than Gmail. Or at least they were in 2009, the latest figures I can find.

        Yeap, I still have my hotmail and yahoo email addresses. Since when these accounts are an asset for MS and Yahoo? (hell, I'm not using them, for about 4 years now... the data related to them are taking some storage space somewhere).
        Boils down to lies, damn'd lies and statistics...

      • by owlnation (858981)

        And yet, Yahoo has more subscribers than Gmail.

        What % of those are active users though? Yahoo has been around a long time in Internet terms, far longer than Google, and had email a decade before Google. For me, I'm no doubt considered a Yahoo subscriber, because I have had a couple of Yahoo accounts since they started their service. However, one I've not logged into in years, and the other I check about once a year for legacy reasons, but it has nothing but 1,000s of spam mails in it.

        One the other han

    • by rueger (210566)
      AOL was incredibly overvalued that they bought media giant Time Warner.

      Fixed that for you.
    • by tehcyder (746570)

      They will continue to see their users migrate to Google and Apple.

      What's Apple got to do with anything?

  • They should have taken the deal when M$ offered it. Bing is already more popular than Yahoo lol. Then again, who cares what the retarded half of the internet uses.
    • The best thing that can happen is for microsoft not to get all of Yahoo's accounts.

    • Definitely. Microsoft offered $31 a share. YHOO stock currently trades at $16.36 a share. Microsoft "substantially undervalues" Yahoo but the free market undervalues them even more.
    • by Genda (560240)

      You underestimate the power of retards... exPresident Bush, future President Pallin, why the entire Tea Party hasn't got 5 IQ points to share betwixt'em and look at what they just did to the national legislature (lol.) That and some of the folks that ran for election this year are at least a burger shy of a Happy Meal. By definition, half the populace must fall below the median IQ, and I'm thinking on a purely numerical basis, the folks with IQs over 120 are a fast shrinking part of the population (have you

  • Does anybody know how AOL still makes money? I thought they went out of relevance when the death of dial-up occurred.
    • "Does anybody know how AOL still makes money?"

      They're mass production consultants, running various training classes and expert one-on-one sessions, around both the US and Europe. Specialism: mass production of CDs. Sideline: coasters.

      • They have this weird subscription service where you pay them money to connect to them over your current ISP, and they pretend to be your ISP. Also Voodoo.

    • by oldhack (1037484)
      Suck/track credulous fools to diverge personal info and then sell it as marketing data, just like everyone else on the net. What else?
  • Yahoo! at least has some brand name left, while AOL is just a farce at this point. If they were going to do a merger, it should be the other way around.

    Interesting side note: For the first time in over a year, I saw a commercial on TV that actually said "AOL Keyword". I haven't heard that phrase in a long time, which just shows how far off the map AOL has fallen.

  • http://www.mulling.com/ [mulling.com]
    But what's AOL and Yahoo?

  • Wow Yahoo, if you merge with AOL after throwing Microsoft's bid back in their face [searchengineland.com] a couple years ago, there will be some serious questions of why you declined such an eligible suitor in favor of a bum. Have you lost all your self esteem [google.com]? Or are you one of those hopeless cases in love with the idea of changing and redeeming your partner? That never works!
    • by khallow (566160)

      Wow Yahoo, if you merge with AOL after throwing Microsoft's bid back in their face a couple years ago, there will be some serious questions of why you declined such an eligible suitor in favor of a bum. Have you lost all your self esteem? Or are you one of those hopeless cases in love with the idea of changing and redeeming your partner? That never works!

      Or maybe Yahoo will get offered a lot more money. Though I don't know where AOL will get it from. Also, we're just seeing this from the AOL side. Yahoo hasn't indicated they have even the remotest interest in this. After all, I'd get hot and bothered, if I fantasized about buying Yahoo for the money in my wallet, but I think they would want a bit more than my $140 for the company.

  • by demonbug (309515)

    Does anyone actually know what AOL does these days?

    I know what Yahoo does; they host my fantasy football league (they might have other stuff too, I'm not sure; that's the only thing I've visited their site for in the last few years). Haven't seen anything from AOL since before their last ill-fated merger.

    Their branding is pretty much worthless, I can't think of any products they sell or sites they own that I would want to visit (oh wait, wikipedia says they recently bought TechCrunch; sadly I don't read it)

    • They run a lot of news and portal sites. Recently bought tech crunch.
    • by tehcyder (746570)

      I know what Yahoo does; they host my fantasy football league (they might have other stuff too, I'm not sure; that's the only thing I've visited their site for in the last few years)

      Flickr and delic.io.us both seemed to require yahoo email addresses to login the last time I looked, and those are both popular sites.

  • This makes perfect sense, and stands to be one of the largest mergers in history, as the only currency that can accurately measure these companies' value is Flooz. The combined company should be worth nearly $250 Trillion when adjusted to 1999 dollars.

  • Do we really need AIM, ICQ, Yahoo messenger, AOL mail, Netscape mail, Compuserve mail, Yahoo mail, AOL portal, Yahoo portal, and Yahoo search all under one roof? Hasn't AOL bought up and gutted enough companies just to keep the domain emails alive and nothing else?

    How about making AOL and Yahoo messengers speak XMPP and making the server interoperate? How about working on making a decent search technology as a limited partnership to compete with Microsoft and Google? They don't need to merge, but they could

  • by pyrr (1170465) on Monday November 08, 2010 @07:22PM (#34167902)

    I recall an IT industry commentator comparing on the hp-Compaq merger as two garbage trucks colliding. I thought that was a reasonably accurate analogy.

    But these two companies are kind of...worse. Maybe two honeywagons colliding? It'll take a while to get all that stink mopped-up!

  • SNL had it on their fake news that this merger "is like to seniors dating at a retirement home. No one really minds it cause they will both be gone soon"
  • by nurb432 (527695)

    I doubt they can buy a cup of coffee at this point.

  • Two massive chunks of suck on the internet are in danger of collapsing into a suck-singularity!

  • Looks like it could be one.
  • I have to say, this seems a little underwhelming. Two companies that most people have all but forgotten, now forever together in their techno-obscurity.

  • Will be sad if that dies in the merger ( or just dies.. didn't realize yahoo was so bad off ) as that has become a defacto standard for a lot of people.

  • Maybe they can merge with Comcast, Time Warner, and the likes, and we all can have only one giant company that sucks, instead of many!
  • I leave it to the reader to decide which of the two is the drowning company and which is the brick

  • Oh good. Having just watched Human Centipede I now have two examples of crappy mergers that won't work.
  • If they do this, only one company will need to declare bankruptcy!

    (If I knew were I first read this, I'd attribute. Needless to say, this quote was from another messageboard somewhere when this first came up a couple months ago.)

  • Just wait for them to buy MySpace.

  • And I predict they with name themselves "graveyard.com"
  • Back in the minicomputer days we referred to this as "dinosaurs mating"
  • Awesome! Now two brands that have become totally irrelevant to my online experience can curl up together and die! Good riddance! Don't let the door hit your collective ass on the way out!

  • Ugh... (Score:3, Funny)

    by bradgoodman (964302) on Monday November 08, 2010 @09:53PM (#34169052) Homepage
    Two dead bodies sewn together make a Frankenstein...
  • If banks spent less time throwing out stupid shortcuts to financial success based on brand names that front for little or nothing in useful product, but more time funding development of useful products, we'd have more useful products - and the banks would have more money.

    But they don't know anything anymore except gaming the economy. Brand name mergers are the laziest way to do so. It's all sizzle and no steak, but they get their share of the money explosion from their banker peers on the sizzle.

  • by Count Fenring (669457) on Tuesday November 09, 2010 @01:01AM (#34170266) Homepage Journal

    So, is AOL's actual plan to just keep buying other companies who haven't been relevant since the late 90s, until such time as the massive collection of 90s nostalgia somehow changes, alchemically, into something worthwhile?

  • Dear Yahoo,

    Just stop breaking things and messing with the classic views. If you have to cut some staff, fine. Don't get bought. It'll just get worse and I'll have to change my e-mail. Don't show obtrusive ads. We're willing to look at ads if they're not obtrusive. Most of your current ads are blocked by my HOSTS file. Stop being a dick, and maybe I'll stop blocking your ads. See Google for a reference. Don't have anything to do with AOL. They're the kiss of death.

    Sincerely, somebody who remembers w

  • This last weekend I noticed some modern, fuzzy looking AOL ads in bus stops along El Camino Real, in Mountain View and Palo Alto. These news might partially explain them, because otherwise, I haven't got the slightest idea of what they're selling with them.

  • because it worked so well last time AOL merged with another company, they want to try it again.

  • The original Skynet, that is. The one that mattered in 1997.

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