September 16, 2005 -- Time Warner stock jumped yesterday as investors cheered the possibility of a wide-ranging Internet partnership with Microsoft.
Time Warner has been in discussions with Microsoft about selling a stake in its beleaguered America Online unit and merging AOL with Microsoft's Web unit MSN. The Post broke the news of the talks yesterday.
Time Warner's shares rose 58 cents, or 3.2 percent, to close at $18.50.
A partnership between AOL and Microsoft would put considerable heat on the two other major portals, Yahoo! and Google. While talks are most advanced with Microsoft, Time Warner has also discussed an AOL partnership with both Yahoo! and Google.
Talks with Microsoft have been ongoing, and a deal could be wrapped up within a few months.
Two years ago the two companies settled an antitrust lawsuit over Microsoft's tactics in the Internet browser market.
The talks could also lead to AOL dumping Google's search technology and using Microsoft. Other areas of collaboration said to be under consideration are online advertising and instant messaging.
AOL has seen its subscriber base decline from 26 million in 2003 to fewer than 22 million now, as Internet users fled AOL's dial-up access for faster broadband service.
The AOL talks come as Time Warner CEO Dick Parsons has been conducting a broad review of the company's businesses, looking for new ways to boost shareholder value.
The review comes amidst a push from corporate activist Carl Icahn to shakeup Time Warner's board of directors.
Since the 2000 merger between AOL and Time Warner, about $200 billion of shareholder value has been wiped out, making the deal one of the worst in U.S. corporate history.
