Bad week for Yahoo

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After being dumped by Google, Yahoo seems to be crawling back to its ex.

Like a sad TV drama, Yahoo continually ends up getting hurt by the now 10-month-long love triangle that's entangled three of the Web's biggest names. First, Microsoft flirted with Yahoo, offering to buy it up for $33 a share. Yahoo walked away and into the arms of  Google, who proposed an advertising deal with the struggling yet still popular web portal. But when the US Justice Department started asking questions about the relationship, Google split. Now alone and with its stock price slumping to $13, Yahoo's chief says it's interested in getting back together with Microsoft.

"To this day, the best thing for Microsoft to do is buy Yahoo," CEO Jerry Yang said on stage at a conference this week. "I don't think that is a bad idea at all, at the right price – whatever that price is. We're willing to sell the company."

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Mr. Yang's talk got pretty cold reviews and added to the unease from stockholders and analysts about the company's direction.

Bloomberg News talked to one stock analyst who said: "This is a classic case of the company needing new blood. It's a property that, with the right management, could be turned around."

The New York Times called this "Yahoo's lost year."

Yahoo is likely to try to work out a smaller search deal with Microsoft, a combination with Time Warner’s AOL or both. Google’s withdrawal also means that Yahoo’s drifting will continue for many more months while any new deal is negotiated, vetted by regulators, and maybe approved by shareholders. If the next deal doesn’t break down, as the last two did, Yahoo might be able to get back to business in the middle of next year.

This is a bad time for Yahoo to be "drifting." Before Microsoft's unsolicited bid 10 months ago, this was supposed to be the company's recovery year. Yahoo wanted to rally and compete with Google and Microsoft – not merge with them. But with its seemingly fragile condition and a recession rolling in, Yahoo might not be able pull together on its own. A GooHoo partnership is history, but maybe MicroHoo will live happily ever after.

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