Academic

Lots of activity relating to Microsoft-Yahoo. On the one hand, the NYT is reporting that Microsoft is speaking with News Corporation about a joint bid for Yahoo. You may remember that News Corp was one of the companies tagged as a potential white knight for Yahoo. Here's the strategic rationale:

If News Corporation throws its weight behind Microsoft???s offer, that could allow Microsoft to raise its bid, putting even more pressure on Yahoo and its shareholders. At the same time, the alignment of Microsoft and News Corporation would remove a possible alternative for Yahoo, leaving it with fewer opportunities to escape Microsoft???s grasp.

This leaves lots of questions unanswered. Most importantly, how would Microsoft and News Corp cooperate in the post-acquisition world? That is a lot more interesting than the fight over Yahoo in isolation.

Meanwhile, W$J is reporting that Yahoo and AOL "are closing in on a deal to combine their Internet operations, a move that could thwart Microsoft's effort to acquire Yahoo."  Standing alone, the AOL deal looks like a real stink bomb, but Yahoo's management is reportedly planning to link that move with two other transactions: "repurchasing billions of dollars of its own shares and ... negotiating with Google Inc. about an advertising tie-up." If I am a Yahoo shareholder, I want to know more about that buyout, but don't expect me to hang around for an encore.