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Yahoo-AOL Rumors Reemerge

  • Fortune, Tuesday, October 31, 2006 11:45 AM
Yahoo is still after a big deal that will put it back in the good graces of its unhappy shareholders. The giant Web portal most recently approached Time Warner about buying AOL, essentially rejuvenating talks that broke down about a year ago. Both sides deny the talks, of course--but regardless of whether anything comes of this, a Yahoo-AOL merger would be a face-saver for CEO Terry Semel.

Let's not forget that Yahoo was bested again last year by Google in a deal that brought the search giant a 5% stake in AOL and an exclusive in Internet search. If AOL turns Yahoo away again, Semel and co. may still look to other options: Yahoo has a market cap of about $35 billion, with about $3 billion in cash and securities it could spend. Ray Ozzie and Bill Gates would love to own the Web's largest audience, considering that its floundering Web business continues to be a perennial thorn in the software specialist's side.

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