Friday, October 14, 2005

Everyone wants a piece of AOL

Now Yahoo has thrown their hats in the ring. It looks like they just want to head Google off at the pass before their get their claws into the thing. Here is what AOL did to get so wanted so fast:

The interest in AOL comes as the company transforms itself from a declining business focused on providing dial-up access to a free content provider able to tap the recent boom in online advertising.

This was a very smart move and it looks like it may pay some big dividends for Time Warner:

The Web portal side of AOL's business is worth about $11.3 billion, based largely on AOL's advertising potential, media analyst Michael Nathanson at Sanford C. Bernstein estimated in a research note.

This would be the most interesting fit I think:

Google would have most to gain from a stake in AOL.

It would give the Internet search leader a way to build a portal -- and grow its advertising potential -- while preserving an existing relationship with AOL responsible for more than 10 percent of Google's revenues.

That would make Google the top dog when it comes to the internet. They already generate lots of cash with their search technology and other offerings. This would give them a whole bunch of revenue streams to keep peoples eyes glued to Google. I only use Google's search technology right now buy use Yahoo for their e-mail, news, finance, and fantasy sports.

If Google could buy AOL then it would be a great incentive to stay on Google all the time instead of Yahoo. Hmm it looks like it will be a 3 way bidding war between the three internet titans for AOL. Now that would be a real catalyst for Time Warner Stock (TWX) in the near term I should think.

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