This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Is There Finally A Yahoo, AOL Deal In The Works?

NEW YORK (TheStreet) -- Yahoo! (YHOO) boss Melissa Mayer quietly having drinks with AOL (AOL) boss Tim Armstrong has led to speculation the two companies could merge, following Alibaba's initial public offering and the windfall goes on Yahoo!'s balance sheet.

Though details of the discussion between the two former Google  (GOOG) executives are not known, it happening at Allen & Co.'s yearly media summit adds to speculation something is brewing between Mayer and Armstrong.

Yahoo!'s Alibaba Cash Could Trigger a Buying Binge in Tech 

B. Riley analyst Sameet Sinha believes the two companies are so similar in a number of ways that it would be interesting to see what direction Yahoo!'s Melissa Mayer might take the with the new merged venture. In a phone interview, Sinha said he expects Yahoo! will report 38 cents a share on $1.1 billion in revenue, when the company reports second-quarter results Tuesday afternoon.

Yahoo! shares were up 1.1% to $35.83, while AOL shares were up 0.89% to $40.63 in mid-Monday trading in New York.

Following the Alibaba IPO on the New York Stock Exchange, Sunnyvale, CA.-based Yahoo! will come into a lot of money, perhaps as much as $10 billion or so. Yahoo owns 22.5% of Alibaba based on the strategic partnership it made back in 2005. Based on a Alibaba original IPO valuation of $120 billion that comes out to a payday of approximately $26 billion, before taxes for Yahoo!. Alibaba is China's largest online merchant - that country's version of an e-commerce marketplace which includes features from both Amazon (AMZN) and eBay (EBAY).

After taxes Yahoo would then have more than enough cash on hand to make a deal for AOL, with AOL's market cap slightly less than $4 billion.

Neither AOL nor Yahoo could immediately be reached for comment.

This is not the first time a potential AOL-Yahoo! partnership has been in the news. Three years ago there were rumors that both companies had hired financial advisors to investigate the companies' possible pairing. At the time, it was thought that New York-based AOL's Tim Armstrong would become CEO of the newly combined company and Yahoo!'s then CEO Carol Bartz would assume the role of Chairman.

-- Written by Gary Krakow in New York.

To submit a news tip, send an email to tips@thestreet.com.

Gary Krakow is TheStreet's Senior Technology Correspondent.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,031.14 +43.63 0.26%
S&P 500 1,984.13 -1.41 -0.07%
NASDAQ 4,518.9020 -48.6960 -1.07%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs