Yahoo CEO and cofounder Jerry Yang is in New York this week trying to complete talks with Time Warner CEO Jeff Bewkes over combining Yahoo and Time Warner’s internet operations — mainly AOL — according to Valleywag sources.
Kara Swisher says Yahoo execs don’t want Time Warner to get more than 25 per cent of the new company (YahAOL?) unless Time Warner throws some cash into the deal. Yahoo management thinks its assets are significantly more valuable than AOL’s and thus should count for more.
Unfortunately for Yahoo , it may have trouble convincing AOL of that. Time Warner is reportedly asking for US$8-$10 billion for AOL, while YHOO’s market cap is down to almost $20 billion over the past few weeks, thanks to the credit crisis. Swisher said “these profound stock drops … could spur Yahoo to act before it gets even worse, which is why talks have been more frequent in recent weeks.”
Henry Blodget thinks the deal is foolish at $8 billion and Yang shouldn’t offer up more than $6 billion and should fire at least 4,000 staffers. Nasty. Swisher gives a nice overview of what a combined Yahoo/AOL behemoth would look like — and it isn’t pretty.
But maybe, just maybe, the company would have enough oomph and smart talent (if the right people are fired — Blodget is right, there is way too much bloat at both companies) to get things moving in the right direction. Who knows? Maybe the combination would reinvigorate everyone involved.