No Chance of an AOL - Yahoo Merger, Despite Rumors

Yahoo has been having quite a week. After firing CEO Carol Bartz, the company is examining its options and has hired consultants to come up with a path forward. Perfect timing for the perennial AOL acquisition/merger rumor to pop up again.

Right on cue, the possibility of an AOL/Yahoo merger is being discussed again with rumored talks between the two companies. Tim Armstrong, AOL CEO, is said to be interested in bringing the two ailing companies together and then running the combined company.

It's hardly the first time Armstrong has thought about this and his interest in Yahoo is no secret.

But, apparently, Yahoo will hear nothing of it and there are no plans to even discuss a possible partnership/deal/acquisition. That said, Yahoo may just be playing hardball and expressing its disinterest publicly as a negotiation tactic.

That's unlikely, even in these desperate times at Yahoo, no exec is, or should be, thinking that merging with yet another web 'has-been' is going to fix anything.

And, while the view may be distorted from the inside, either from AOL or Yahoo, everyone on the outside can see that this is a really, really bad idea.

The fact is, there's a lot of similarity between Yahoo and AOL. Both were web giants back in the day, but have fallen on bad times. And both struggle with pretty much the same problem, dwindling revenue and relevance.

They've both been under the knife, with plenty of layoffs and restructurings. They've also been acquiring smaller companies in a struggle to remain relevant.

So, with similar background and similar strategy, the two may benefit from sharing their experience, costs, people and so on. But they've both failed to change anything so far, Yahoo is in a bad shape and no amount of restructuring has managed to fix it.

AOL is not doing great either, there were some small positive signs in its last quarterly financial report, but it's not enough to believe there is hope for the company yet. If they can't do it on their own, there's no reason to believe they can do it combined.