Talk of Yahoo sale puts a spanner in AOL's plans

TROUBLE at Yahoo has resulted in private equity firms losing interest in AOL.

Yahoo's well publicised sacking of ex-CEO Carol Bartz and the rumours that the firm's board is now trying to find a buyer for the company has meant that private equity firms have lost interest in another fallen giant, AOL.

The stories of AOL and Yahoo have many similarities - both firms were once darlings of the dotcom boom and have now been overshadowed by newer upstarts that do things better than they do. While Yahoo has repeatedly tried to reinvent itself by buying many companies and web properties, AOL stagnated, though its recent acquisition of the Huffington Post is perhaps one of its better moves.

Nevertheless, Reuters reports that Yahoo's significantly higher valuation of around $18bn has considerably higher quality assets attached to it. AOL's valuation, around $1.6bn, includes the firm's dying dial-up business and an advertising business that simply hasn't been able to get off the ground.

While Yahoo isn't the firm it was during the dotcom glory years, it still has a number of significant web properties, including its webmail service and Flickr. It also has a presence in Asia through a partnership with Alibaba Group, perhaps the most enticing part of any potential purchase.

There's always the chance that AOL and Yahoo will end up in the same hands, but the real problem for AOL is that fewer companies will want to splash out the cash now that they might be able to get a piece of Yahoo instead. µ