So, Microsoft Buys AOL Now?
This story was written by Joseph Weisenthal.
It's probably just pure fantasy, but maybe the Yahoo-Microsoft (NSDQ: MSFT) story is actually over this time (knock on wood). If so it means that the end result of Microsoft's 4.5 month effort was that its two biggest competitors, Google (NSDQ: GOOG) and Yahoo (NSDQ: YHOO), are now in the same camp. In the meantime, the company convinced everyone that its desperate to buy its way onto the internet, so not a very nice outcome all things considered. So now it's even more desperate, right? First thing it'll do is pull out all the stops to prevent Google-Yahoo from happening. It may not have much of a case, but it has nothing to lose by crying bloody murder, so there's no reason not to try. If it can delay the deal for a few months, that's counts as a score.
MSFT-AOL?: The only other asset out there that comes close to Yahoo's size and price is AOL (NYSE: TWX). Everyone is swimming around it, as Jeff Bewkes has said flat out. According to TechTraderDaily, Gabelli & Co. analyst Christopher Marangi is predicting such a deal in a research note this morning, saying: "AOL has its challenges, but no other available Internet asset possess its breadth or scale An acquisition of AOL would modestly increase MSFT's search share, boost its page views and give it the dominant third-party ad network in Platform A." Excluding the access business, Marangi estimates AOL is worth $12 billion.
As Rafat noted the last time Yahoo/Microsoft collapsed, Microsoft has some $50 billion burning a hole in its pocket, so that alone will force to act big. Other than another one-time special dividend to tide shareholders over (kind of; it's not really that exciting of a move), a major purchase looks like the only option with that money. A Facebook deal will get talked about (again), but this seems like a longshot, given the expense/the lack of a business model. Who knows if it will come to fruition, but the various pressures will at least produce a lot of chatter around a Microsoft-AOL deal.
By Joseph Weisenthal