Although I rarely like buying a stock because of the chance that someone else may buy it in the future, I agree with Nyonnais' reasoning for the most part here that AOL would be a good fit for Yahoo!.
It would bring premium brands and premium video under the Yahoo! tent. Whatever its traffic is today, Yahoo! can likely increase it through referrals. Yahoo! also needs all the premium content it can get these days.
It would be fun to see Tim Armstrong working alongside Marissa Mayer at Yahoo! as well.
Probably the biggest reason why Mayer would be tempted to do this deal now, though, is that she needs to show that she's moving the needle of the core business revenue. Layering on an extra $1.5 billion to a business that chugging along trying to show growth to its $5 billion run rate would be big enough hocus pocus to make it appear that the "core business" is growing, even if it isn't actually.
Nyonnais believes that a possible cash-rich split scenario involving Yahoo!'s stake in either Alibaba or Yahoo! Japan could give Yahoo! an incentive to pull the trigger on buying AOL.
It's not a sure thing that Yahoo! will do a cash-rich split. However, if it does, the logic is sound. Were it to sell its stake in Yahoo! Japan today, for example, it would be worth $10 billion. Most analysts model that Yahoo! would then have to pay about $3 billion in taxes on that sale.
In a cash-rich split scenario, Yahoo! Japan buys its stake back from Yahoo! for $10 billion, but gives Yahoo! $6.67 billion in cash and $3.33 billion in "other assets."
That other asset could be AOL, which Yahoo! Japan would buy and then hand over to Yahoo! along with the cash in exchange for its stake back. In this scenario, neither Yahoo! nor Yahoo! Japan pays taxes on these stakes as they are considered by the IRS to be swapping assets.
Yahoo!'s essentially getting AOL for free instead of paying the IRS $3 billion in cash, plus the $7 billion in cash for their Yahoo! Japan stake. And the core business gets to show "growth" from the layering on of AOL. Everybody is happy -- although AOL would probably want a much higher price than $3 billion.
There's a lot of sound logic to Nyonnais' idea. Even if it doesn't happen, though, AOL at these levels is cheap relative to a lot of other Internet names.
At the time of publication, Eric Jackson was long AOL and YHOO.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.