• by Wendy Davis , Staff Writer @wendyndavis, September 15, 2005

In a summer of consolidation rumors, today's New York Post reports that one of the biggest deals in the industry is in the works. The paper's saying that Microsoft is in "advanced" talks to buy a stake in America Online from Time Warner.

The Post reported that the current version of the deal calls for Microsoft and Time Warner as equal partners in AOL. Time Warner also is reportedly selling all or part of its interest in the company to Yahoo! and Google.

The article comes after months of gossip swirling around the major Internet players.

In June, The New York Times reported that Microsoft was in talks to buy online advertising company Claria. Those discussions apparently broke off shortly after the article appeared.

Time Warner chairman and CEO Richard Parsons said in May at its annual shareholder meeting that executives had mulled the possibility of spinning off AOL. At the time, he said the company had rejected that decision. Still, it's no secret that the original merger hasn't worked out for Time Warner the way the company had hoped.

And then there's Google, which this week raised more than $4 billion cash with a secondary stock offering, bringing its total cash on hand to more than $7 billion.

Fulcrum Global Partners analyst Richard Greenfield told Reuters that investors give AOL a valuation of no more than $10 billion -- though he thought the valuation could end up going as high as $15 billion to $20 billion. Either way, it looks like Google has just raised the funds to buy a significant chunk of AOL, if the search giant is so inclined.