AOL and Yahoo Close to a Deal?

Aol YahooMore and more rumors indicate a possible AOL-Yahoo merger. The latest one comes from Reuters and claims that AOL CEO Tim Armstrong is often meeting with his company’s top shareholders in order to convince them to acquire the troubled portal.

Armstrong said during one meeting that the merger could be a profitable move, since it would save up to $1.5 billion in “overlapping data centers and duplicate news sites such as sports, entertainment and finance.”

After Carol Bartz’s departure and rumored interest from Alibaba, Yahoo is still struggling. One top shareholder said that its investors have been discussing options for a year, but a number of open issues remain. Their focus has moved from the business’s fundamentals to possible ways to carve it up, the value of different assets, and ways to sell them off.

Armstrong was recruited by AOL from Google. His mandate is to improve advertising revenue into the ballpark of Facebook’s, Google’s — and Yahoo’s.

If Yahoo is struggling, AOL isn’t doing all that well, either. In August the company reported a second-quarter loss, then shares dropped 31 percent. “It’s not fair to grade him (Tim Armstrong) right now but I think the investment community is a little put off. There is a strong desire to see tangible results.”

No matter what happens, an AOL-Yahoo merger might be interesting. Instead of having two struggling companies, a single entity may have a better chance.

Graphic: Eric’s Tech Blog

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