• Financial Times/Bloomberg News , Thursday, November 20, 2008 11 AM

Any deal between Yahoo and AOL will likely be stalled until Yahoo finds a replacement for outgoing CEO Jerry Yang, the Financial Times reports. As one insider says, "How can you do a deal with a company that does not have a CEO? It doesn't feel like (there is) any energy to it."

Even so, Bloomberg News reports that Yahoo and Time Warner executives continue to negotiate terms of a proposed deal that would see Time Warner hand over AOL's advertising business to Yahoo in exchange for a stake in the combined company. According to Sanford C. Bernstein analyst Jeffrey Lindsay, Yahoo and AOL would need to lay off as many as 3,000 employees for the deal to pay off. ''It's difficult and high-risk -- a merger between companies in similar activities but with very different cultures,'' Lindsay said. ''It's not the best deal by far.''

Combined, the companies would save as much as $500 million per year on workforce reductions and real estate savings, said Sachin Shah, an analyst with ICAP Corporates LLC. A transaction valuing AOL at around $6 billion would make sense for Yahoo, the Bloomberg report said, as long as AOL manages to retain its lucrative search partnership with Google.

Meanwhile, Yahoo's stock fell further in Wednesday trading, finishing at $9.14, its lowest level since February 2003. Yahoo's market cap is now $12.7 billion, less than a third of the Microsoft's $47.5 billion bid earlier this year.

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