AOL Joins In On the Yahoo! Circus
First it was Microsoft bidding to buy Yahoo!. Then Alibaba expressed their interest in the Internet company.
Now it's AOL's turn to join in the fray and woo Yahoo! into their arms.
It seems that everyone wants to saddle up with them. Tim Armstrong, CEO of AOL has been pushing the idea to top shareholders that buying Yahoo will bring up to US$1.5 Billion in cost savings for them.
By merging with Yahoo, AOL can save up by consolidating both data centers and their new sites. This will also streamline their advertising programs as they will have a more focused and stronger edge to compete with Google.
Also, Yahoo can revitalize the image of AOL, which most see as a dated company past its prime.
AOL's stock has sunk more than 40% since it left the Time Warner umbrella in 2009. The company is still anchored to old technology such as the Internet dial-up access business that others describe as "Dead money"
Aside from this, AOL has invested around US$160 Million on its local new network Patch and US$315 Million acquisition of the Huffington Post.
Subscriber revenue for AOL is expected to decline 23% this year. This accounts for 28% of it's total revenue. Advertising revenue forecast for this year is a 1% to 2% increase.
As of June 30, Yahoo and AOL have common shareholders including Capital Research, BlackRock, Vanguard and State Street.
AOL has declined to comment on this story.
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