From Silicon Alley Insider: Now that Microsoft and Yahoo have ended talks, AOL (TWX) is in play. Not officially, perhaps, but certainly unofficially. The two most likely AOL buyers, moreover, are…Microsoft (MSFT) and Yahoo (YHOO). Yahoo is a better fit, but we expect a Microsoft-AOL deal to be announced within a couple of months.
Background: AOL needs to be combined with one of the Big Three (Google, Yahoo, or Microsoft). The industry needs this, AOL needs this, and Microsoft (MSFT) and/or Yahoo need this (Google doesn’t need it and wouldn’t risk antagonizing regulators by trying to buy it). The industry cannot support four big general players, and as long as Microsoft remains willing to lose billions on its web business, AOL will not be able to survive on its own. If Microsoft or Yahoo doesn’t buy AOL, the company should be chopped up and sold in pieces.
More on SAI >