Fortune: Strategically, Yahoo has four choices
Although Yahoo is apparantly denying it, Fortune is reporting that the largest Web property (audience-wise) is negotiating with Time-Warner for an acquisition of AOL. Wrote Fortune's Tim Arango and Adam Lashinsky:
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....
....A Yahoo purchase of youth-oriented Facebook for as much as $1 billion has been rumored for weeks. [Yahoo Chairman and CEO Terry] Semel could also sell his company. Microsoft and others would love to own the web's biggest single audience. So, too, would Google - if only to keep Yahoo away from Microsoft (Charts).
In addition to Yahoo's heavy investment in Internet Explorer, here on Between the Lines, we've noted other areas in which Microsoft and Yahoo are well-aligned (making them a pretty good match). Actually, one of those was on the digital rights management front where Yahoo operates in Microsoft's PlaysForSure ecosystem with it's music service. But Microsoft's move to Zune, which lives outside the PlaysForSure garden, may ultimately unalign the two companies when it comes to Digital Rights Management given how Zune, if it gets any traction, could end up "sticking it" to PlaysForSure licensees. That said, a Microsoft acquisition of Yahoo -- and a subsequent hitching of the Zune wagon (the portable content player) to the Yahoo Music horse -- could be one of several boosts Zune will need if it has any hope of taking on the iPod (at the very least, another is a Bono).
Arango and Lashinsky also noted that Yahoo's stock is off 35 percent year and how Panama -- its new search-advertising sytem -- has suffered delays. The way Fortune sees it, Yahoo has four choices:
- Buy AOL
- Sell to Microsoft
- Merge with eBay
- Stay the course
Which do you think it will do?
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