The Times of London is, I think, exaggerating a rumor that Yahoo and AOL might merge in an effort to find off the Microsoft takeover of Yahoo. I don’t even think this is necessarily a bad idea if you made sure the management of both companies had the necessary shakeups to turn *both* companies around from what seem like desparate corporate positions. However it just doesn’t ring likely to me at all, and begs the question of how the Yahoo board could make all this work *and* avoid the wrath of the market which probably will view the Microsoft offer as far more favorable than a pie in the sky possible AOL deal. That said, I’m open to this possibility. The main thing I’m *against* is more of the same from Yahoo. Profits and share price matter more than any anti-Microsoft sensibilities, and the board should keep that top of mind at all times.
Disclosure: Long on Yahoo
Joe Duck 
Yahoo is really in a bind. The only real choice they have to stay independent is to lead a new technological revolution. Yahoo’s innovation, especially in search, is dead. I think it’s likely that Yahoo will forced to sell and new players like Palo Alto-based ManagedQ to break onto the scene this year. It’s apparent Yahoo can’t innovate so new players (or Google) will take this place in the market. This or Microsoft will buy Yahoo and constrain innovation, which we all know is also possible.
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