While it is true that Yahoo hasn’t come up anything innovative for a while, Yahoo is still the most visited web site on the internet. It still owns some really good web services like flickr, del.ico.us. Also keep in mind that AOL still owns the most popular chat service in America and also owns tons of popular blogs (like Engadget, Download Squad).
Yahoo and AOL combined can be a formidable opponent for Google and Microsoft. Combining the two services would definitely be powerful. I love Google and I think they are the best and everything – but I think they have it easy. They need some competition from becoming too evil. And this I would like to see some kind of merger.
@cwilbur: how would Apple be a long-term winner due to the AOL-Yahoo merger ? I know they share some common board members but Apple doesnt really have that big of a hold on the internet in terms of web properties (other than .mac).
How about an Apple-Yahoo merger ?