• D: All Things Digital, Tuesday, September 23, 2008 11:32 AM

The Yahoo board is set to meet for the first time since Carl Icahn and two new board members were added. As Kara Swisher reports, there will be much to discuss, particularly the company's stock falling to a five-year low. What can Yahoo do to boost shares? Swisher says the purchase of AOL from Time Warner looks to be Yahoo's "most attractive option," and that the talks are "more serious than (have) been reported."

Other problems that need to be addressed include attracting new top-level talent, reacting to the troubled economy (in which display advertising looks particularly weak), and appeasing disenchanted investors. However, Swisher that Wall Street's recent meltdown might not weigh as heavily on the Web giant as previously thought. "In relative terms, with a strong balance sheet, the company is quite healthy compared with many firms," she says, adding that Yahoo may become a reliable place "advertisers flee to in times of uncertainty."

Meanwhile, Swisher reiterates that the AOL talks are serious and that leadership is interested in doing a deal worth a little more than half of Time Warner's $10 billion asking price. Such a deal would make Yahoo a giant in the email and instant messaging space, but it could also raise regulatory concerns. It certainly presents integration issues, as the HQs of both companies are on opposite coasts. However, Swisher says an AOL deal would certainly strengthen Yahoo, giving it more leverage particularly in negotiating partnerships with Microsoft.

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