Is Yahoo-AOL dot com in offing?

Yahoo and AOL are already discussing with their bankers for a possible merger of Yahoo with AOL soon. Now the question remains whether after the merger Yahoo will already sink in the ocean of AOL [America Online] or a new company titled Yahoo-AOL will emerge from the merger. Tim Armstrong, AOL's chief executive, is talking to Yahoo advisors from private equity firms and investment banks about possible options for a merger, Bloomberg News reported, citing two people familiar with the matter.

Armstrong had been interested in a merger with Yahoo last year, when Carol Bartz was still CEO, but was ultimately rebuffed by the company, Bloomberg said. He is now reconsidering the possibility as a way to bolster both tech companies, the report said. One option includes Yahoo acquiring AOL, with Armstrong at the helm of the combined company as chief executive.

But Bloomberg cited one person who said Yahoo is unlikely to be interested at this time in a deal with AOL, considering the company's declining revenue and heavy losses. Yahoo's market value, at about US$18.2 billion, is more than 11 times than that of AOL's at $1.6 billion.

Yahoo and AOL have been losing revenue as the Internet evolved and competitors such as Google Inc. and Facebook Inc. took advertising dollars away.

Yahoo, once a leader in the online advertising world, rejected a $47.5-billion takeover offer from Microsoft Corp. in 2008. Bartz was hired afterward and then abruptly fired this week after years of declining revenue growth. Internet pioneer AOL has also struggled, losing almost US$800 million since it was spun off from Time Warner Inc. in 2009.

According to an April 29 SEC filing, Bartz would have received a cash severance of $5.2 million and a stock award of $5.2 million if she were fired at the end of 2010. According to CNNMoney, the first news outlet to report on Bartz's severance, she could receive even more than that due to cash bonuses she may be owed for this year on top of her $1-million annual salary and stock options that could kick in if Yahoo's shares hit certain highs by 2012.

Before Yahoo, Carol Bartz was chief executive at Autodesk for 14 years. In January 2009, Bartz replaced Yahoo co-founder Jerry Yang as CEO after Yang failed to sell the company to Microsoft.

According to Business Insider's Nicholas Carlson, ex-CEO of Yahoo, Jerry Yang is trying to buy back the company. Yang co-founded Yahoo with David Filo in 1995 and was Yahoo's CEO before he left in 2009, when the company hired Carol Bartz as chief executive. Yang still owns about 3.63% of Yahoo, while Filo owns about 5.8%, Carlson said in his report. The two might team up to make some changes at the company, and Yang is reportedly considering looking for more capital to buy more Yahoo stock, the Business Insider report said. On September 8, 2011, the recently fired Bartz called Yahoo's board a bunch of "doofuses" and Third Point LLC, a New York investment group that owns about a 5.1% share of Yahoo, called for the company's board to resign.

Yahoo Inc's independent directors have tasked the board's "strategy and transactions committee" with leading its strategic review. as the company attempts to map out its future following the ouster this week of Chief Executive Carol Bartz. The committee is headed by director David Kenny. Yahoo will tap investment bank Allen & Co. to work with the board's strategy committee, the person said. UBS Investment Bank is already working with Yahoo on a possible sale of the Internet Company's stake in Yahoo Japan, and also advised the company during its recent dispute with China's Alibaba Group over online payments site Alipay. The bank will work alongside Allen & Co. as the board undertakes a strategic review.

While speculations, rumors and commentaries on possible fate of Yahoo is flooding the web, a group of South Asian entrepreneurs are set to launch a new site similar as alibaba.com with a very different idea, targeting millions of users.

Commenting on this site, one of the insiders said, "This will be a combination of social networking as well business. We have been researching yahoo.com, google.com, amazon.com, ebay.com, alibaba.com, orkut.com, facebook.com, twitter.com and many others with the ambition of inventing completely a new concept of launching a new site soon. We are initially targeting few hundred million users only in Asia. Of course, we also wish to have users from America, Europe, Australia, Oceania and African continents. This possibly is going to be a huge site on the web."

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Is Yahoo-AOL dot com in offing?

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