Is Yahoo In Talks to Buy AOL?

Yahoo is sick of playing second fiddle to Google, and Fortune Magazine is reporting that they may be in talks with Time Warner to buy AOL, a move that would shake up the search world and impress Wall Street.

If Fortune's sources are correct, Yahoo is attempting to rekindle the talks that ended over a year ago. The negotiations ended with Yahoo getting shut out, and Google gaining a 5% share of AOL and exclusive advertising and search rights. Acquiring AOL would not only show up Google, but also save them face.

At this time AOL is denying any kinds of talks with Yahoo. If this is the case, or if AOL rebuffs their offers, Yahoo has a few other options that they can pursue.

Fortune suggests that Yahoo's best option, for the company and for shareholders, may be to sell to Microsoft. Combined, Yahoo and Microsoft would be an internet and computing powerhouse, earning an estimated annual revenue from search advertising nearly equal to Google's $7 Billion in 2006.

Another avenue for Yahoo to explore would be a merger with eBay. The two sites would compliment eachother, but sources suggest that this would be one of the least likely paths for either party to actually pursue.

The final option that Fortune suggests is for Yahoo to stick out and stay the course. If this is the case, they will need to explore new areas, such as monetizing search on cell phones, videos, and social networking sites.

Yahoo's stock is down 35% on the year, and at this point, they need to do something. What that something is, only time will tell.

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