Novice Investing - Microsoft and AOL Is A Possibility

Date: Monday 01st 2008f December 2008 05:08:32 PM

Microsoft and AOL Is A Possibility - 11/07/2005

By: Novice Investing Staff

Report has it that Microsoft Corp. (MSFT) is the front runner in getting the crown jewel of Time Warner, American Online (AOL). The two had competed bitterly in the past. However, Microsoft has decided to put their difference aside to battle a much more formidable foe in the search arena, Google Inc. (GOOG)

To be honest, AOL has been getting a lot of mails lately. As much as three other companies are interested in acquiring AOL to be the front runner in the battle of content. AOL has around 20 million dial-up subscribers and it seems that its broadband offering was not as successful as the company would want.

We calculated that AOL will be worth at least $ 10.2 Billion due to the number of subscribers it had. Of all the suitors, Microsoft has the deepest pocket of all. With $ 30 Billion in cash and equivalents, it can buy up all of AOL and still has plenty of cash to buy other competitors.

The losers of this deal will have to find other smaller competitors to swallow. Potential acquirers might want to take a second look at Earthlink Inc. (ELNK) which we expect to be sold for $ 1.18 Billion. This is a much smaller deal and acquirers get a much smaller base of customers. But, it is better than nothing. Money isn't a problem for all of AOL suitors. If they can afford to buy AOL for $ 10 Billion, they sure will have enough change to swallow Earthlink.






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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation for Google Inc. (GOOG) or any other securities.

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