Rumors are swirling all over the web concerning so-called white knights coming to the rescue of Yahoo! (Nasdaq:YHOO). But when you look at what's being thrown around, the solution would be worse than the problem.
The two most prevelant rumors are that Time Warner (NYSE:TWX) would offer cash to Yahoo in return for a 20 percent stake, where Yahoo and AOL would merge. It wouldn't include the weak dial-up Internet access business of AOL.
One other rumor would have Yahoo partnering with Google (Nasdaq:GOOG) to outsource its search advertising business to them. That would have about zero chance of passing antitrust regulators, as the combination would result in about a 90 percent search market share.
As far as the AOL merger, what would that offer Yahoo? AOL is about the last company Yahoo should want to merge with, as far as reputation goes. Both of them are struggling with online advertising challenges.
Another separate rumor has Microsoft (Nasdaq:MSFT) and News Corporation (NYSE:NWS) partnering in some type of deal involving the two with Yahoo, although no details at all are worked out, and the talks are really more at the feeling things out stage, rather than serious negotiations going forward.
The talks could be a backup for Microsoft if they think they have to up the ante in order to quickly secure the deal.
All of this is mostly posturing by Yahoo execs in order to secure a higher bid from Microsoft. The deals talked about with Time Warner and Google really don't make much sense at all. The AOL one especially would bring more problems than they are worth, and the Google deal wouldn't be allowed to go through in the form of search.
This is starting to look a lot like the actions coming forth when News Corp. made the offer for Dow Jones, and all sorts of offbeat deals were offered in attempt to fend them off. None of them made any business sense either.
For Microsoft, they will get Yahoo if they want them. The only reason they may offer more is to secure a deal quicker. That's probably the only variable they're considering in upping the ante to get them.
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