The business stories that matter, by Fortune's Colin Barr
Type Size  -  +
February 1, 2008, 1:53 pm

How AOL gains from Microsoft-Yahoo

Microsoft’s (MSFT) bid for Yahoo (YHOO) is a rare bit of good news for Yahoo shareholders, but they’re not the only potential beneficiaries. One line of thought says the $44.6 billion proposal could help investors in Time Warner (TWX), publisher of Fortune, by giving the company a chance to sell its AOL unit

The prospect of Microsoft joining up with Yahoo could spur the leading Internet advertising player, Google (GOOG), to take a “counterbalancing defensive measure” such as buying AOL, says Chris Atayan, CEO at consumer products wholesaler Amcon Distributing (DIT) of Omaha, Neb., and a former investment banker. He notes that Google took a 5% AOL stake back in 2005 and says a purchase of the rest could help Google maintain its leadership cushion over a combined Microsoft-Yahoo.

Not everyone buys the notion that AOL’s fortunes have turned brighter as a result of the deal. But Atayan, who owns Time Warner stock, says the 46% rise in Yahoo shares Friday gives Time Warner chief Jeffrey Bewkes “a great chance to say here’s the valuation” that could apply to AOL. He believes Time Warner has done a good job cleaning up the AOL business since its swoon during the tech bust but adds, “AOL has never been worth more in recent years than it is now.”

Excellent analysis of the situation

Posted By James Johnson Los Angeles,CA : February 1, 2008 4:47 pm
CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. CNNMoney.com Privacy Statement.
Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
Subscribe to Daily Briefing: RSS feed | email newsletter
* : Time reflects local markets trading time.† - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges.• Disclaimer
Powered by WordPress.com.