AOL and Yahoo discuss merger

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According to Bloomberg, AOL and Yahoo are reportedly in talks regarding a possible merger. The report comes just three days after the dismissal of Yahoo’s CEO, Carol Bartz.

AOL CEO Tim Armstrong says talks have started to gauge interest in a possible merger to strengthen both companies. Armstrong previously expressed interest in a merger with Yahoo, but then CEO Bartz quickly rejected the idea last year.

Both AOL and Yahoo were once Internet pioneers, but they have been struggling to compete against the likes of Google, Facebook, and others. These struggles will make a deal unlikely, especially considering AOL’s recent losses and declining revenue.

In recent years, Yahoo has lost ground to new services and social networking opportunities offered by Google and Facebook. Yet despite Yahoo’s struggles and weaknesses, it remains the most-visited U.S. Web portal.  Yahoo’s current market value is about $18.2 billion, while AOL’s is just $1.8 billion.

Although Bloomberg doubts the likeliness of a merger, it will give Armstrong the opportunity to deflect attention from recent drama surrounding TechCrunch publisher Michael Arrington and his new venture investment fund, CrunchFund.

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