Now someone’s whispered in the Wall Street Journal’s ear that Yahoo and AOL are on the threshold of a deal that would fold AOL into Yahoo and see Time Warner make a cash investment in the combined entity in return for about 20% of the place. AOL, without its dwindling dial-up business, would be valued at about $10 billion and Google, of course, owns 5% of AOL.
Then the idea is for Yahoo to use Time Warner’s money to buy back a few billion dollars worth of stock for somewhere between $30 and $40 a share to pacify investors watching Microsoft and its money walk out the door.
Yahoo said this afternoon that it's going to experiment with letting Google deliver ads alongside Yahoo’s search results to test the revenue potential of an outsourcing arrangement, apparently to substantiate that it’s worth more than Microsoft’s offer.
Meanwhile, the Journal also says that Microsoft and News Corp are seriously considering pairing up for a joint run at Yahoo.