Keith Watanabe * NET 2.0

I've stated before that if Google had failed in their 700 Mhz bid that they should make a run to buy out AOL as a new revenue generation machine (and to avoid their dependence on online advertisement as nearly their sole source of revenue).  Now, it seems that Yahoo is getting close to AOL as well with Time Warner wanting to sell them off to Yahoo.

Honestly, I think this partnership also makes sense.  I need to go back and do my research on the numbers, but last time I checked (and I admit it was a while back), AOL still had a good amount of dial up users.  Yahoo has their own ISP offerings so this would nicely compliment what AOL has.  Yahoo could easily move users slowly towards their broadband offerings (hopefully decreasing the price to make it seem more appealing than using Cable modems).

The other thing is that AOL has some good content that would compliment nicely with Yahoo's properties.  For instance, their video section and merging chat together.  There's a lot of redundant overlap that Yahoo does better and integrating the platforms (namely the user base) would hopefully end this redundancy.

Also, this move would help improve Yahoo's image somewhat.  Many had at one time considered Yahoo as "The Internet."  However, that face slowly got eroded with Google's move into the market.  Still, Yahoo dominates a good portion of the market in terms of traffic.  Having people using them as an ISP simply reinforces this idea, which recently, seems to have been weakened with the increasingly dominated Google.

Where does Yahoo stand?  I think that the whole M$ deal would make sense only to shareholders in the short term.  It's actually very bad business in the long term and would hurt the market.  Unfortunately, with the market souring overall, shareholders seem to want their returns immediately.  I'm hoping that companies like Google and maybe Time Warner can do some equity swap, convert the voting capabilities of those "bad" shareholders and help get Yahoo back on track.