Yahoo Huddles as Firms Show Interest - Wall Street Journal

Yahoo Inc., its stock rising on news that potential suitors are exploring deals for the company, is sounding out the seriousness of the interest, people familiar with the matter say.

In recent weeks, several private-equity firms—including Silver Lake Partners and Blackstone Group LP—have been toying with the idea of taking Yahoo private, including a scenario where they join forces with AOL Inc. to acquire Yahoo, according to people familiar with the matter. The firms have discussed the scenario with AOL.

Getty Images A Yahoo billboard in San Francisco.

Yahoo stock rose 6% Wednesday in unusually active trading. Then, after news reports about the interest, the shares spiked 10% Thursday morning, before slipping back and ending the day at $15.93, up 4.5%.

The interest among financial firms is preliminary and the parties have yet to approach Yahoo about any deal, people familiar with the matter say. They cautioned that a deal would be especially difficult to pull off given the complexities involved in spinning off Yahoo's Asian assets and avoiding a tax hit.

Yahoo has asked Goldman Sachs to find out if the expressions of interest are credible and—if any approach becomes formal—what steps to take, a person familiar with the matter said. The person characterized these discussions as routine in response to market speculation.

Yahoo has an existing relationship with Goldman, which helped fend off Microsoft Corp.'s advances in 2008.

The situation compounds the management challenges facing Yahoo chief executive Carol Bartz, who has been hit with a wave of executive departures and who some shareholders and board members feel isn't acting fast enough to turn around the Sunnyvale, Calif., company.

Yahoo declined to make Ms. Bartz available for an interview.

The barriers to any deal remain high. Yahoo has a market capitalization of roughly $21 billion and even if the company sold off some businesses, the price of a deal could be higher than many private-equity firms would stomach, they said.

Private-equity firms have been discussing one scenario that would entail Yahoo selling its valuable stake in Chinese Internet giant Alibaba Group back to Alibaba. Some analysts peg the value of that 40% stake at about $10 billion. The remaining company could be merged with AOL and taken private.

Bloomberg News AOL's CEO, Tim Armstrong, left, has been focusing on generating original content to package to advertisers. He has suggested Yahoo should do the same.

Some analysts said Yahoo could end up selling that stake on its own to appease some shareholders who have long agitated for such a move.

Alibaba sounded out eBay Inc.'s interest in a deal for Yahoo in September, according people familiar with the matter, but there were never serious discussions.

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The potential suitors believe a Yahoo-AOL combination could yield big cost savings, boosting the profitability of their online advertising businesses. AOL and Yahoo both run businesses that sell graphical ads, and offer email and instant-messaging services and a range of media properties on subjects ranging from celebrity gossip to news.

AOL chief executive Tim Armstrong has said privately that he thinks Yahoo could benefit from pursuing the strategy he is pushing at AOL: focusing on generating lots of content to package to advertisers. An AOL spokeswoman declined to comment.

Analysts say a Yahoo-AOL merger could create a strong competitor in the market for online display ads, which include video, banner and interactive ads. That market is expected to be roughly $20 billion world-wide this year, but many companies believe it could grow to $50 billion over the next few years as more video content moves online.

Bloomberg News Yahoo CEO Carol Bartz is under pressure to speed up turnaround efforts. The company also has suffered a recent wave of executive departures.

The market is fragmented, with no dominant player.

Yahoo and AOL both sell display ads for their own Web properties, with Yahoo on track to sell about $2 billion worth this year and AOL on track to sell $500 million, according to Marianne Wolk, an analyst at Susquehanna Financial Group.

Yahoo's Right Media display advertising exchange could also benefit from an influx of AOL inventory. The stock-market like system provides a way for advertisers to buy graphical ads across an array of websites through an auction.

—Amir Efrati contributed to this article.

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Skype, Facebook partnership a boon for both companies - Christian Science Monitor

Facebook, meet Skype. Skype, Facebook.

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Skype 5.0 for Windows, the latest iteration of the popular VoIP platform, will incorporate many Facebook functionalities, Skype reps announced today. Among the features included in Skype 5.0 are an integrated Facebook News feed, and the ability to call and text Facebook friends on their mobile phones or landlines. In addition, Skype users will soon be able to sync Facebook status updates with Skype "mood" messages.

"We're working with companies such as Skype to make it easy to find your friends anytime you want to connect," Ethan Beard, the director of the Facebook Developer Network, wrote on the official Facebook blog today. Beard's post had received upward of 1,700 comments as of this afternoon, most of them overwhelmingly positive.

The Skype and Facebook partnership, of course, is good business for both companies. Skype will likely see a jump in the amount of time its users spend on the platform. And Facebook will again increase its reach – a prerogative for the social network in recent months.

In August, Google introduced its own VoIP service. Google Voice, as the service is called, allows Gmail users to text or call any US or Canadian phone line at no cost. According to Google, a million users tried out its new Gmail call functionality within the first 24 hours the service was available – a ringing success for Google, and a sure sign of the demand for good VoIP platforms.

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Ill. governor debate yields bickering, few details - Washington Post

CARBONDALE, Ill. -- The major-party candidates for Illinois governor bickered over the state budget and jobs Thursday without providing specifics in an hour-long debate, leading Green Party candidate Rich Whitney to accuse them both of offering "fantasy economics."

Democratic Gov. Pat Quinn repeatedly called his GOP opponent "heartless" for proposing budget cuts that would almost certainly require deep cuts to schools. He also said state Sen. Bill Brady lacks courage and integrity.

Quinn boasted that he has persuaded companies to expand in Illinois and has cut state spending by $3 billion. But he had little to say about what further steps he would take to close a $13 billion deficit.

Brady, meanwhile, insisted Quinn is driving jobs away from Illinois with his proposal to raise income taxes.

"Gov. Quinn's the job governor all right, but it just happens to be for Indiana, Missouri, Kentucky and other states," said Brady, of Bloomington.

He said Illinois must balance its budget without raising taxes, although he didn't outline how he would accomplish that.

Whitney said neither candidate was being honest with voters.

"We can't rely on fantasy economics," said the Carbondale attorney.

The three candidates faced off in a televised debate at Southern Illinois University. Two other candidates, independent Scott Lee Cohen and Libertarian Lex Green, were not invited because they failed to get 5 percent in the most recent polls.

One of the most pointed exchanges involve an agreement Quinn reached with a key union, the American Federation of State, County and Municipal Employees. The deal says that if the union comes up with at least $50 million in budget cuts, the state won't lay off any union members or close facilities through mid-2012.

Whitney said the deal harms both taxpayers and government employees because it delays real action on the state's problems. Brady accused Quinn of signing the agreement to win AFSCME's endorsement and compared it to something that ex-Gov. Rod Blagojevich, now a convicted felon, would support.

"This is a deal Gov. Blagojevich would be proud of Gov. Quinn for," Brady said.

Quinn maintained the agreement is a boon for the state because it will cut costs. He said he's the only governor who has been able to negotiate givebacks with AFSCME.

"I have a record of saving taxpayers money by getting union concessions," Quinn said.

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Associated Press Writer Deanna Bellandi contributed to this report from Chicago.

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