Microsoft, AOL talk partnership

Potential deal may have helped Time Warner shares

Having so far failed in its attempt to hook up with Yahoo, Microsoft is talking to AOL about a partnership that could include merging their online operations.

The news that Time Warner might be close to figuring out a way to better monetize its suffering AOL asset might have been the catalyst for an unusually strong move in Time Warner shares Wednesday. The stock gained 5.2% to $14.65 on volume that was 70% more than average.

While one insider said Wednesday that a Microsoft-AOL deal could be just a few weeks away, another dismissed the talks as more of the same old thing that has been going on all year.

"Everybody is talking to everybody nowadays," the insider said.

Not quite, but it's true that several of the major Internet companies have been jockeying for position lately. Microsoft tried unsuccessfully to buy Yahoo, then Yahoo said it will team up with Google. Then Microsoft said it might want to buy just some of Yahoo, which also didn't fly.

And Google three years ago bought a 5% stake in AOL for $1 billion, so any deal between any company and AOL could automatically involve Google to some extent.

In the meantime, Yahoo's plan that involves sharing some ad revenue with rival Google is being discussed at committee hearings on Capitol Hill because lawmakers fear that Google might be dominating the online search industry.

All the action is being closely watched by Carl Icahn, the powerful financier who is waging a proxy battle for control of Yahoo so that he might sell all or part of it to Microsoft -- or another suitor -- while scoring a quick profit for himself and other Yahoo shareholders.