Today, Henry Blodget suggested that now that the MSFT/YHOO talks are over, AOL has been put into play in a major way. Henry suggests AOL will be bought by MSFT or YHOO, and prefers YHOO, but favors MSFT as the eventual buyer. Meanwhile, he suggests that "If Microsoft or Yahoo doesn't buy AOL, the company should be chopped up and sold in pieces."
But, in my opinion, selling off AOL's pieces may be the most attractive option for the company and with the highest payout.
From a purely qualitative perspective (Henry's undoubtedly better at crunching the numbers), I look at all the bits and pieces of AOL and imagine they'd very naturally be better off in different places.
Take AIM, for example, and you can imagine that YHOO would be much hungrier to increase their Instant Messaging user-base than MSFT, who has a much larger market-share and may be more comfortable in that space. Or, I could see a Private Equity shop deciding to take AIM private and then crush upstarts like Meebo. Either way, buying AIM would be a user play, and can be optimized in its own right.
Meanwhile, MyAOL (their startpage/"personalized homepage") would be best as a technology play and thus much better off ending up at MSFT than YHOO. YHOO's My.Yahoo is already a great product and has the largest market-share, so AOL product with not so many users is not incredibly valuable. However, AOL's prodcut could knock the cover off what MSFT's currently has (My MSN is a joke) and could help MSFT do what they haven't been able to (even with their IE dominance): keep people at MSN.
The list of these types of products goes on. The point is that a company like AOL could do very well selling itself in pieces and may not be the best last option, but rather the best first option.
I think there are cultural benefits to selling a big Internet company into pieces: When an entire company gets sold, usually meshing it with the acquirer gets messy. The bigger the company, the bigger the mess.
However, if you bring in a smaller unit, there's more of an opportunity to get it right and truly integrate the product and the people. This, in the long run (and the reason Henry thinks AOL would be better off at YHOO), could be the only way to make anyone happy and successful as we go from a Big 4 to a Big 3.
And lastly, doing things in pieces is a way to get Google and IAC invovled. Buying AOL as a whole only allows YHOO and MSFT to play -- Henry points this out -- but in pieces, Google could end up with something as small as Userplane or Yedda, and IAC could get its hands on Sphere. I'm not saying these would specifically be good matches for the companies, I'm just saying competition would be good.