While Yahoo shares dropped to a five-year low of $15.31 — or about half the price Microsoft offered to pay for the company back in February — on Monday, it has been rumored that the company merger with AOL will probably take place by the end of October, to rescue the company from what, also given the delay in the much-awaited advertising deal with Google, is certainly a bad moment for the entire company.

Analysts don't all agree on which company would benefit the most from the deal, some suggesting that it would actually be Yahoo to rescue Time Warner's AOL, which would justify why the AOL parent company is reportedly pushing very hard towards finding a definitive agreement that allow the deal to take place as soon as possible.

According to TechCrunch, the deal would entail the acquisition from Yahoo of the entire AOL business, except its ISP services, with TimeWarner paying around $2 billion in exchange for a 33% share of the new entity. Should this prediction reflect the actual deal, this would mean that TimeWarner would suddenly own a significant stake in the Google/Microsoft search and advertising war.

To some, any such deal would have to face several months of scrutiny both in the US and Europe, in a similar fashion to what is happening these days with the controversial Google-Yahoo advertising deal being scrutinized by the Department of Justice. Concerns have also been raised as to how much time and effort, should the Yahoo-AOL deal be approved by the authorities, would have to be put into fully integrating the two companies and have them work as a single organization.

On the other hand, sealing the deal would allegedly allow AOL to monetize its assets well beyond today's figures — some $2.4 billion annually — because of the superiority of the recently reno

vated Yahoo advertising platform. Also, according to Comscore, the group would suddenly become a major player in both the e-mail market (an hypothetical 48% of all worldwide email accounts against Microsoft's 42%) and in the instant messaging market, with a combined 39% against Microsoft's 55%, even though it has to be said that the email market has never been one of the major thrusts for Microsoft.

Yet another positive effect for Yahoo would be a dominance in the online portal/services/content market as well, outsourcing search advertising to Google and leaving the Mountain view giant with a clear search market dominance. Microsoft, on the other hand, would probably end up more empty-handed than ever as far as the entire online market is concerned.

Overall, though, there is still doubt on whether the Yahoo-AOL merger agreement would be most beneficial for one or the other company. Financially, the deal is unlikely to benefit Yahoo at least in the short term, which means the company is likely to lose even more stock value right after the deal is sealed. In the long run, though, the positions of dominance in both the email and instant messaging market will certainly be one more card to play as far as Yahoo is concerned, making this deal a long-tail game and a strong investment in the future.

In particular, TechCrunch's position is that Yahoo is unlikely to succeed in the long run without a strong and competitive search advertising: while its platform is certainly more effective that AOL's (this being one of the main reasons the two companies are willing to go through with the deal), Google is still a competitor way further ahead of Yahoo in this business.

All that is left now is to wait and see whether the Department of Justice, currently in the process of scrutinizing the Google-Yahoo deal, will eventually allow it, which would mean for Yahoo to find at least a temporary solution to what has always been one of it weakest sectors, waiting for a competitive and effective in-house solution to kick in and potentially projecting the entire company towards a much brighter future.