Disparate nature of AOL's operations deters suitors

New York

NO one should buy AOL. Yahoo and Verizon are the latest to be linked to the onetime Internet darling. As its ad business struggles to grow, most of the company's profit still derives from subscriptions of yore. Even using AOL to save taxes is tough, too. Any takeover rationale would be a stretch.

Marissa Mayer-led Yahoo is one name that keeps popping up. Aggressive hedge fund Starboard Value, a shareholder of both tech companies, extols the virtues of a combination. It estimates up to US$1 billion of potential savings. That's optimistic, as the figure represents about a third of their combined operating expenses. Beyond the cost-cutting, it's hard to see what the attraction for Yahoo would be. The AOL division home to monthly dial-up, virus protection and other services delivered US$421 million of operating profit in the first nine months of last year. AOL's bottom line was only US$351 million over the same period. The subscription business is also dying, albeit at a plodding pace.