AOL Might Buy Yahoo

AOL might buy Yahoo with private equity investors, sell off large parts of the company, and run the rest as a rival to Google in online advertising, The Wall Street Journal reported. It would be a deal of unprecedented irrelevance.

It's not clear how Yahoo, the has-been portal, and AOL, the has-been dial-up service, can ever hope to vanquish Google, which is expanding aggressively and has become a vortex of engineering talent and a juggernaut in online advertising. Both AOL CEO Tim Armstrong and Yahoo CEO Carol Bartz, in contrast, have posted quarter after quarter of disappointing earnings and are comparatively bereft of computer scientists. Sure, Armstrong is just getting going at AOL, and he's a former Google sales honcho, but what's he got up his sleeve? Blogs? He bought Techcrunch, and his own hyperlocal blogging startup, and now he wants to buy Yahoo, according to WSJ.

On the other hand, Armstrong's only got to convince one or perhaps a handful of private equity investors. The Journal says some of Yahoo's assets could go "to interested media or technology companies, and the remaining company would be of a much smaller valuation that private-equity firms could get financing for." Blackstone and Silver Lake Partners are among those reportedly interested in this deal. Which makes sense: No matter what might happen to Yahoo, they'll still get their dividends and fees.

[Photos of Armstrong and Bartz via Getty Images]