Yahoo's Mayer not ready to scoop up AOL, says report

Speculation of a merger between the two once-mighty companies rises again, but Yahoo CEO Marissa Mayer reportedly still harbors doubts.

Marissa Mayer
Yahoo CEO Marissa Mayer Screenshot by CNET

Is Yahoo, which will reap billions from an early investment in Alibaba when the Chinese e-commerce giant goes public this summer, going to pursue an often-rumored merger with AOL?

Matchmakers have speculated about the possibility of a merger between Yahoo and AOL for the last couple of years. The rumor mill recycled the story recently after Yahoo CEO Marissa Mayer and AOL CEO Tim Armstrong -- both former Google executives -- were spotted having late-night drinks at a media and technology conference last week.

But such a tie-up is complicated. While both companies see potential benefits, Mayer has her doubts, according to a report published Monday by Recode.

The report said that while Armstrong is pushing for a merger, Mayer finds the idea of the merger "small, unexciting, uninspiring and backward-looking."

Still, there are some upsides to the possible pairing: Mayer reportedly covets AOL's Huffington Post, the online news site with an audience of 79 million unique monthly visitors across all its properties. The report said Armstrong is, for now, unwilling to sell the Huffington Post separately.

Mayer will soon face her biggest challenge as CEO since taking the top job in 2012. During her tenure, the company's stock has doubled, spiking to more than $41 in January. But much of the investor excitement is due to the company's 22.6 percent stake in Alibaba. The expected windfall from the Chinese company's IPO will land Yahoo $10 to $15 billion, according to analyst estimates.

Shareholders will be paying attention to see if Mayer can use the new funds to revitalize Yahoo's still-ailing advertising and content business -- without Alibaba's success to prop it up. AOL has a market capitalization of about $3.2 billion, well within Yahoo's price range.

Last quarter, the company reported a 2 percent increase in display advertising revenue -- a small but important gain since display advertising accounts for 40 percent of the company's total sales. Yahoo is slated to report its most recent quarterly earnings on Tuesday.

Yahoo declined to comment on the speculation. AOL did not return a request for comment.

This is not the first time a rumored tie-up between the once-mighty early Internet companies has been in the news. The move was speculated in 2008 and again while former Yahoo CEO Carol Bartz was in charge.

 

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