Boston, MA 01/24/2014 (wallstreetpr) – There has been a lot of chatter around possible merger of Yahoo! Inc. (NASDAQ:YHOO) and AOL, Inc. (NYSE:AOL). The two companies have a lot in common; the most easily noticeable one is their struggle to make the most from online ad spending. Note neither company has talked about a merger being in the works. These talks are however propelled by Eric Jackson, the manager of Toronto-based Ironfire Capital, a hedge fund with stake in the two companies.
Taking into account the situation that Yahoo! Inc. (NASDAQ:YHOO) is presently in, it doesn’t come as a big surprise that it would be considering options to better its position, and much more, discussing such deals out of media glare lest it pile pressure on the stock.
Some analysts, reading on the rumored merger, believe that it would be a good idea to combine Yahoo and AOL as this will help in cutting operating costs and also boost revenue opportunities due to expanded user-count. Both Yahoo and AOL generate revenue from selling online ads around news and entertainment content. It means that one advertising team would better serve the two companies.
Given that AOL owns potentially lucrative media brands, these would be a big boost to Yahoo! Inc. (NASDAQ:YHOO). It is worth noting that Yahoo has made numerous acquisitions since CEO Marissa Mayer joined the company in 2012 from Google Inc (NASDAQ:GOOG).
However, it has been an uphill task for the CEO to rival industry leaders Google and Facebook Inc (NASDAQ:FB). The problem that Yahoo faces is that it still lacks adequate information about its users and this limits its bargain with well-paying advertisers.
While some analysts believe that Yahoo! Inc. (NASDAQ:YHOO) investors are better served with a merger between the company and struggling peer AOL, other analysts have sought to disagree. Those who don’t see the deal working cite such things as combining two struggling companies would just result in a bigger troubled company.
Also, the analysts say that it would be difficult deciding who between Yahoo! Inc. (NASDAQ:YHOO)’s CEO Ms Mayer and AOL’s CEO Tim Armstrong would lead be resulting combined company considering that they both have a lot to prove. It remains to be seen how things will shape out in the coming weeks as more reports around the rumored marriage emerge.