Is an AOL-Yahoo deal a good idea?

Combining the two Internet companies could help or wreck them, analysts say

By , Computerworld |  Internet, Yahoo, AOL

The Internet is abuzz with speculation and Yahoo's stock rose Thursday after reports this week that AOL is looking to scoop up ailing Yahoo .

Citing unnamed sources, the Wall Street Journal reported that AOL and several private-equity firms are showing interest in making an offer to buy Yahoo . While the Journal said AOL just may be looking to marry the two Internet companies, there's also speculation that Yahoo could be split up and sold piecemeal.

The discussions, according to the Journal, are so preliminary that they haven't even included Yahoo yet.

AOL declined to comment on the reports and Yahoo did not respond to requests for comment.

The reports gave a boost to Yahoo's stock price. Yahoo stock climbed 68 cents a share, or nearly 4.5%, to close at $15.93 after rising as high as $16.76 earlier in the day.

Some industry analysts are wondering what the benefit would be for AOL to buy up Yahoo.

In recent years, AOL has struggled after being a top dog in the Internet community, and Yahoo has also seen better days . Yahoo's stock price dropped 50% between 2006 and today, according to Dan Olds, an analyst with The Gabriel Consulting Group.

Yahoo, however, was back in the news on a positive spin this year. The company, which remains in distant second place in the search market, struck a deal in August with Microsoft , whose Bing search engines is in third place. In a bid to take to take on first-place Google , Yahoo tossed aside its own search technology and now offers Bing-powered searches.

AOL has recently been buying up online media sites in a bid to boost the digital content it offers customers. Earlier this month, the company acquired TechCrunch, a technology news blog and its Chief Technology Officer Alexander Gounares said it may be buying more content sites . It also operates the Patch community news sites and owns Engadget, a Web magazine on consumer electronics.


Originally published on Computerworld |  Click here to read the original story.
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