Yahoo Heads Back to the Hopefully Waiting Arms of… AOL?

It seems clear that the Yahoo board is delusional. There is just no other way to describe it aside from out-of-touch, clueless, or just plain crazy. They turned down the Microsoft offer. Fine, we get it. Big bad Microsoft would cramp your free-wheeling style that has had you, the first big search and portal online, cowering in the shadow of Google . You can't get bought by Google because everyone from the EU to the US to the kindergartners at the school down the road would see that as a monopoly the likes of which Microsoft could only dream about. And since you feel like you are getting asked to prom by one of the undesirables, who do you turn to? According to the TimesOnline, AOL?

Is Yahoo's board unaware that Time Warner themselves view AOL as a bad business decision? Rumors have swirled since 2005 that Time Warner would spin AOL off, with most recent news that at least the dial-up access division, but possibly the rest of the company as well, to be forced out from under Time Warner's umbrella. If Time Warner does keep the search and web site portion, why on earth would they want to saddle themselves with Yahoo as well?

AOL has been a mismanaged brand for years, from the lack of planning for a proliferation of broadband to lack of innovation in either the search or the web content. Yahoo is in a very similar position, having lost its innovative edge as well. It makes no sense to try to prop one company up with the other.

If this is truly more than rumored, Yahoo is even more desperate than I thought. The shareholders are already banding together to sell their shares as a block. Barry Diller doesn't want to touch AOL with a 10-foot pole unless the price is drastically lowered, so the list of possible suitors for either company is getting shorter and shorter. There may not be anyone willing to buy either of them before long.