Filed under: Deals, Internet, Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX)

Microsoft (NASDAQ: MSFT) might be much better off by not overpaying for Yahoo! (NASDAQ: YHOO). To pay nearly $45 billion for a company that’s really struggling seems extreme — especially since I think Time Warner (NYSE: TWX) will spin out AOL in a few months. Microsoft could buy AOL much, much cheaper than Yahoo.

AOL brings to the table both traffic and many properties, including BloggingStocks! The problem is that revenue is declining and so are unique visitors, down from 110 million average unique visitors in the fourth quarter, to 109 million in Q1.

I think that with Microsoft’s focused management, it could achieve the same turnaround at AOL that it is anticipating achieving with Yahoo, only it wouldn’t have to spend $45 billion.

Some analysts have stated that AOL is a consolation prize for the loser in the Yahoo! battle. I think Yahoo! is the booby prize and AOL might just be the better deal.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer’s fund has no position in any stock mentioned, as of 5/1/08

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This entry was posted on Thursday, May 1st, 2008 at 2:40 pm and is filed under Latest News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.