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Thursday, October 14, 2010

AOL and Yahoo

The news that came last night about AOL and private equity putting Yahoo in play interested me very much. It gave me more conviction on a potential AOL play. AOL is doing good things, and they actually have a strategy to make a legitimate, broad ranging, local news network. We just have to wait-and-see if their new Ad platform really works. (Considering the management team are very smart guys, with history on their side via the work done at Google, I give them the benefit over the doubt.)

But if AOL can synergies YHOO, the way they are doing at AOL, then this deal makes a ton of sense. YHOO is a mess, with no cohesive plan. (Are they search or social network or content provider or ????? What is Yahoo trying to be?!? It can not be all things to all people. This is why it is failing.)

YHOO passed up a wonderful buyout opportunity via MSFT a few years back at $30/share. Now that we know their business is not what it use to be, they will be foolish to pass up this opportunity.

Bottom line, AOL's team knows how to differentiate themselves from other web properties and focus on that differentiation. Something Yahoo so desperately needs.

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