Why Yahoo should pay $20 billion for AOL.
Posted on November 14th, 2007 by Startup Addict
Reading a few articles on alleyinsider regarding Yahoo possibly purchasing AOL from Time Warner for $13 - 15 billion got me thinking (clearly got Time Warner thinking). In a web world of retarded valuations Time Warner demanding $20 billion is par for the course, however here is why I might finally agree. If Facebook commands roughly 40 million users and has a going valuation of $15 billion with an unproven advertising model then check this:
According to Wikipedia and a recent AVC post AIM is boasting a 63 million user base in the middle of 2006! So let’s dare to say that it is around 75 million users today and will come with the AOL’s gigantic purchase of advertising.com. Couple that with some social services and advertising prowess (RightMedia) that Yahoo already wields and bingo…a certified a*s-kicking social machine with a user acquisition of $266 per user instead $375 per Facebook user. Don’t forget Yahoo’s existing market cap and user base would dilute the cost of the new services even further.
