AOL Isn't Negotiating A Search Deal, It's Negotiating An Eventual Sale To Microsoft
source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/06/04/businessinsider-aol-isnt-negotia...
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- TimALoftis
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AOL, which currently outsources search to Google, began negotiating a new search deal last week, CEO Tim Armstrong said yesterday at the D8 Conference out in California.
Tim is just being a coy. AOL isn't negotiating a search deal. It's negotiating a sale.
A source familiar with Tim and AOL's strategic thinking suggests that a likely outcome of these negotiations will be AOL's sale to Microsoft.
And even if this informed speculation proves false, it's a fact that whoever does sign AOL to a long term search deal will have the inside track to an eventual acquisition.
Good. We've long held that the field of portals will eventually consolidate down from three major players – AOL, MSN, and Yahoo – to two. It's almost happened a couple times.
Readers will shudder to recall that a couple years ago, it looked like the merger would be Yahoo-MSN, but then Yahoo's Jerry Yang asked Microsoft to pay more than $31 per share. Whoops.
Then, in Fall 2008, AOL and Yahoo got close enough to a merger that the heads of each company's media properties spent a weekend together hashing out what properties would go and which would stay after the deal.
Now, the most likely merger will be MSN-AOL.
Our source suggests that Microsoft will want to wait till AOL stops turning in horrible numbers each quarter, but there are, in fact, a couple factors giving the deal momentum already:
* Microsoft will pay anything to inch its way up in search market share.
* Likewise, Google will do anything to defend a deal from Microsoft.
* So what can Microsoft do that Google won't? Offer to buy AOL. Google is run by engineers who sincerely loathe the content-creation business.
* Getting AOL's search queries AND defeating Google in big negotiation is easily worth the $2 billion or $3 billion it would take for Microsoft to buy AOL.
* Secondarily, merging AOL into MSN (or MSN into AOL) actually makes some sense. AOL and MSN have overlapping sales and engineering teams, so a merger would create all kinds of overlapping costs that could be cut without sacrificing much in the way of production.
Tim is just being a coy. AOL isn't negotiating a search deal. It's negotiating a sale.
A source familiar with Tim and AOL's strategic thinking suggests that a likely outcome of these negotiations will be AOL's sale to Microsoft.
And even if this informed speculation proves false, it's a fact that whoever does sign AOL to a long term search deal will have the inside track to an eventual acquisition.
Good. We've long held that the field of portals will eventually consolidate down from three major players – AOL, MSN, and Yahoo – to two. It's almost happened a couple times.
Readers will shudder to recall that a couple years ago, it looked like the merger would be Yahoo-MSN, but then Yahoo's Jerry Yang asked Microsoft to pay more than $31 per share. Whoops.
Then, in Fall 2008, AOL and Yahoo got close enough to a merger that the heads of each company's media properties spent a weekend together hashing out what properties would go and which would stay after the deal.
Now, the most likely merger will be MSN-AOL.
Our source suggests that Microsoft will want to wait till AOL stops turning in horrible numbers each quarter, but there are, in fact, a couple factors giving the deal momentum already:
* Microsoft will pay anything to inch its way up in search market share.
* Likewise, Google will do anything to defend a deal from Microsoft.
* So what can Microsoft do that Google won't? Offer to buy AOL. Google is run by engineers who sincerely loathe the content-creation business.
* Getting AOL's search queries AND defeating Google in big negotiation is easily worth the $2 billion or $3 billion it would take for Microsoft to buy AOL.
* Secondarily, merging AOL into MSN (or MSN into AOL) actually makes some sense. AOL and MSN have overlapping sales and engineering teams, so a merger would create all kinds of overlapping costs that could be cut without sacrificing much in the way of production.
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TimALoftis
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I look for AOL to end its partnership with Google Search this fall and sign a search agreement with either Microsoft or Yahoo (most likely Microsoft) which will eventually lead to a acquisition of AOL probably within the next year.
- 1 year ago
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TimALoftis
