AOL buying Yahoo?

According to WSJ.com AOL may be looking to acquire Yahoo (whatever is left of Yahoo at this point).  AOL is on the acquisition trail.  Last week they made a small deal/big move in acquiring Techcrunch (Michael Arrington is reported to be staying on, $$).  There seems to be a ton of faith in AOL’s CEO, Tim Armstrong.  Private Equity is behind him.  Perhaps AOL can really become the content behemoth that Terry Semel dreamed of.  Terry was early (and according to former employees, not too engaged).

Yahoo has a massive user base via its Yahoo mail, Flickr photo sharing sites and many other properties. Exposing those users to some of the unique content created by the AOL owned sites such as Engadget and Techcrunch could provide some synergy (AHHH, not that word).  The idea behind “synergy” is what got Time Warner into the whole AOL mess back in the day.

AOL Inc. and several private-equity firms are exploring making an offer to buy Yahoo Inc., according to people familiar with the matter, devising a bold plan to marry two big Internet brands facing steep challenges.AOL and private-equity firms are exploring a bid for Yahoo, devising plans to marry two big Internet brands that both face steep challenges. The discussions are preliminary and dont include Yahoo. Jessica Vascellaro discusses. Also, John McKinnon discusses the Estate Tax as it grows as a hot-button election issue.Silver Lake Partners and Blackstone Group LP are among the firms that have expressed interest in teaming up with AOL to buy Yahoo or trying to take it private on their own, these people said. They added that at least two or three other firms could be interested in participating if a formal buyout proposal is drawn up.

via AOL, Private-Equity Firms Explore Bid for Yahoo – WSJ.com.

Yahoo reported earnings numbers yesterday.  Numbers were about as expected and YHOO has had a very nice 6 month run in its shares.   However, if you were a casual reader of news online, or if you get your financial news from your local news, you better check the facts.

There isn’t much that burns me more than a local news reporter who will say that Yahoo ‘earned‘ $1.57 billion dollars this quarter.  Cut to the witty banter with their co-anchor about “must be nice” or some other thoughtless comment.  What is the point, if you can’t get it right.  The difference between earnings and revenue is a extreme as the difference between the number of wins a team has and the number of games they play.  Imagine if your sports reporter stated that your local NFL team had 16 wins last year.  They are that different.

There is a site that covers all aspects of the search engine world. They are a solid news source, but they are clearly allowing a non-investor to create their own summary for the daily newsletter.  Read below:

From a daily newsletter that I receive:

Yahoo Q2 Earnings: $1.57B, Down 13 Percent Vs. 2008
Yahoo announced second quarter earnings of $1.57 billion this afternoon. Compared with the same period a year ago, earnings were down 13 percent. The company is predicting an even more modest third quarter: “in the range of $1,450 million to $1,550 million.” Search revenues were $359 million, off 15

The article that it linked to was just fine.  That would lead me to believe that they are having someone who isn’t as savvy, or doesn’t care much abou their job, type the summaries.

Here is a quick guide for the lazy and ill-informed when reporting on earnings numbers:

• Revenue does not equal earnings!
• Annual sales do not equal earnings!

Important stuff.  Please get it right.  People are listening and reading.

Bob and Scott