Shares of Time Warner Inc., the world’s largest media company, rose as much as 2.4 percent after the New York Post said the company is in talks to sell a stake in America Online to Microsoft Corp.
To which I say: Noooooooooooooooooo!
Pressure from its customers convinced Microsoft it was a very bad idea to consider buying Claria. Time for a similar campaign here?
Update: More from the Wall Street Journal (subscription only):
The conversations have centered on whether AOL would switch to using Microsoft’s search engine, these people say. AOL currently uses Google Inc.’s search technology and was Google’s single largest source of revenue last year.
The talks, which were described as “preliminary,” have also included discussions of combining the advertising sales forces of AOL and Microsoft’s MSN, these people said.
[…]
In January, Microsoft briefed AOL executives about its new search engine, according to a person close to the situation. At that meeting, this person says, Microsoft said it would try to make it financially beneficial for AOL to switch to its technology. A person close to the discussions says the discussions have been “on and off” since January and many different proposals have been floated.
Although AOL’s Internet access business is in decline, AOL still generates a lot of traffic — making it a rich prize for search engines that thrive on huge volumes of traffic. AOL counts 110 million unique visitors to its online service and network of Web sites each month.
Since 2002, AOL has been using Google’s search engine for its properties. Under the agreement, Google pays AOL a portion of the advertising revenue generated from searches by AOL users. In 2004, AOL received about $300 million in revenues from the arrangement. Google says in filings with the Securities and Exchange Commission that AOL accounted for 12% of revenues in 2004. No other customer accounted for more than 10%, it said.
If true, this is about hurting Google, not helping customers.
Update 2: Reuters quotes the original New York Post story:
Citing two unnamed sources familiar with the matter, the Post said the talks concern Microsoft acquiring an AOL stake and then combining it with Microsoft’s Web unit MSN.
Microsoft would pay Time Warner for the AOL stake, leaving the two companies approximately equal partners in the venture, the Post said.
I’m really having a hard time seeing who this deal is good for.
Ed Bott 
>
As a shareholder, I feel your pain. Idiotic acquisitions that bring on a raft of sub-par employees and incompatible systems seem to be Ballmer’s favorite thing. And the PDC had me thinking that maybe the company was inching forward just a bit…
Microsoft’s customers and investors should really be clamoring for new leadership. Ballmer has to go. He has failed miserably as CEO so far. If there is any truth to the Claria and AOL rumors, it only shows that he continues to do so.
I think the two may be talking about compatible search technology that benefits both AOL and MSN, not necessarily buying 50% of AOL from Time Warner. Microsoft might as well throw the money away if they did that (there’s no value there except to hurt Google).
Ed,
I agree with your statements. This is messed up.
Chuck