The Wall Street Journal is reporting (subscription required) that Yahoo is courting Time Warner to combine AOL and Yahoo into a new company, with Time Warner holding a minority stake. The effort is an attempt to either stop Microsoft’s Yahoo bid, or at least force them to sweeten their offer. Whatever the outcome, it appears that Yahoo will enter into some transaction that will significantly alter the online search and advertising industry and will certainly impact the mobile wireless arena as well. Time Warner is reportedly putting the “finishing touches” on a proposal, which will soon be given to Yahoo’s board. In a separate note, Yahoo delayed the nomination process for its board to thwart a proxy fight with Microsoft. See the below video for more details.
The Wall Street Journal postulates that Microsoft is still likely to prevail, despite Yahoo’s efforts to court others, including AOL and News Corp. The implications on the Internet business are somewhat obvious. But a combined Microsoft and Yahoo would become a true wireless powerhouse as well. Both companies have well defined wireless strategies. Microsoft has Windows Mobile which will ship on over 20 million handsets this year. Yahoo has developed a suite of wireless applications that are featured on several wireless carriers including AT&T and T-Mobile. Both Yahoo and Microsoft have an interest in slowing Google’s wireless foray, Android. The next frontier for the Internet, search, and advertising is mobile wireless. Globally, mobile handsets will soon take over as the number one way that consumers access the Internet. Yahoo would be a prized asset for any company looking to effectively compete in this new frontier.