Yahoo in precarious position as CEO beckons Microsoft

Analysts mixed on whether the end of its Google deal sounds the death knell for Yahoo

"Would Microsoft be a good owner for them? It might make sense. The consumer media is the source of most of IT innovation these days. [Microsoft] has not been able to be competitive with Google in search, and they have not been competitive with Yahoo in portals. They should double down in the consumer Internet (space)," Card said.

However, he noted that Microsoft has never successfully pulled off a merger or acquisition with a company as large as Yahoo, and suggested that such a combination could lead to "a ton of blood on the highway."

Andrew Frank, an analyst at Gartner, noted that a Yahoo/AOL merger could hold promise for both companies. "They both face similar challenges in a down market for display advertising," he noted. "There could be some cost reductions base don eliminating redundancy in merging their operations.

He added that the idea of Yahoo continuing solo is not "out of the question." One big indicator of Yahoo's survival chances will be how well its recently released digital display advertising platform performs. The platform is in the process of being tested by a consortia of newspapers.

If the test proves successful in "creating benefits for that particular class of publishers, [it] might signal some hope for Yahoo's ability to get past this current phase and do something much bigger in advertising."

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