One of the more troubled technology firms in recent years has been Yahoo. Once the darling of internet and high tech investors, they have hit a rough patch as of late marked by several changes in management and a failed buyout offer from Microsoft. The latest report fresh from the Wall Street Journal is that AOL is considering taking over the company, and this was enough to surge the share price of Yahoo by 15%.
There are several reasons why this deal will never happen, and should not happen.
1. AOL is a much smaller company, and taking over Yahoo will put it in serious debt. Most of Yahoo’s web properties aren’t turning a great profit, so they are of little value to AOL.
2. AOL is increasingly focused on content, something that Yahoo just doesn’t have much of. True they have Flickr, and some good sites like Yahoo News and Yahoo Sports, but they don’t have a lot of original content that AOL looking for right now.
3. Yahoo is looking to sell its most valuable asset, which most people have never heard of. A company called Alibaba that produces online trading software for the Chinese Market.
When companies like this take a big rise off of some news based on rumor or innuendo, it’s a great time to short them. If you’d like to know more about shorting stocks or just learning more about how the market works, check out Global Finance School.
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