James Altucher: Microsoft Will Buy AOL Next Year

jerry yang steve ballmer steve case aol time warner photoshop

James Altucher, one of our favourite market mavens, has just published his list of predictions for 2010.

The most striking: AOL gets picked up by Microsoft.

From the Wall Street Journal:

AOL is a private-equity dream come true at current levels.  Over the next four years it is going to generate more cash than market cap and then the rest is gravy if it can figure out how to wind down or sell the business without losing too much money or, heaven forbid, transform the business so it becomes exciting again. But, before that happens, why wouldn’t Microsoft buy it? Check out this chart comparing aol.com + yahoo.com + msn.com. 

Rather than buy Yahoo for $22 billion it can buy AOL for one-tenth of that and now compete face-to-face against Yahoo. It’s a no-brainer and I expect it to happen in 2010 once the dust settles around its spinoff/IPO from Time Warner (TWX).

Eddie Elfenbein has summarized the nine other predictions for next year.

1.) The S&P 500 will touch 1300 at some point during the year.
2.) Unemployment goes down to 8%.
3.) GDP hits an annualized 6% by Q2 as inventories get restocked.
4.) Dendreon (DNDN) is acquired.
5.) B will the best letter in the BRIC countries: Brazil, Russia, India, China.
6.) Health care will greatly outperform the S&P in 2010.
7.) Banks start lending money again.
8.) Either Apple or Amazon will develop the killer tablet computing product (or be close to it for 2011).
9.) The world will not end.

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