Yahoo! Gains on Buyout Speculation

Yahoo! Inc. (Nasdaq: YHOO) rose US$4.19 to $34.44 in trading Thursday, following speculation that the company might seek abuyer or partner to help it compete with newly formed Internet and mediagiant AOL Time Warner (NYSE: AOL). As of early trading Friday, however, Yahoo! shares were down at $33.38.

Media companies Viacom and Disney were mentioned in published reportsas potential partners for Yahoo!, which has seen its stock price fall amid a decline in online advertising revenue.

Yahoo! reported fourth-quarter results that were in line with expectations, but proforma income for the fourth quarter totaled $80.24 million, or 13 centsper share, up from $55.7 million, or 9 cents, in the year-earlier period, asrevenue rose 53 percent to $310.9 million.

However, the company, which gets some 90 percent of its revenue from the sale ofadvertising space on its Web site, has suffered as many companies cut back onspending for online ads. Company shares, meanwhile, have plunged more than85 percent over the past year.

Yahoo! still intends to invest money in its global expansion, the companysaid in its quarterly earnings report earlier this month. Communications,commerce and media are all areas for potential growth, the company said.

AOL, meanwhile, merged with Time Warner to form the world’s largest media conglomerate,with interests in movies, television, publishing and music as well as theInternet.

“We really want to be a different kind of company in the newcentury,” AOL chairman Steve Case said when the companies received finalapproval for the deal.

Consumer groups said they remain wary of the new giant, saying that AOL Time Warner could stifle competition.

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