Following Carol Bartz's firing, major changes could be in the works at Yahoo Inc., including a merger with a rival, a new report said.
Bloomberg said AOL Inc. chief executive Tim Armstrong is in discussions with Yahoo advisers to gauge interest in a possible deal between the two companies. An unnamed source told Bloomberg that Armstrong has talked with private equity firms and investment bankers from Allen & Co. who are working with Yahoo.
Under Armstrong's proposal, the two companies would combine and he would be chief executive. Both companies produce original content and make revenue primarily off of advertising. However, Yahoo is more valuable than AOL, with a market value of $18.2 billion compared with AOL's $1.6 billion.
The possible merger between the two companies had been discussed last year. However, Bartz wasn't interested and rebuffed Armstrong.
Yahoo Chairman Roy Bostock fired Bartz over the phone Tuesday evening. Afterwards, Bartz sent an e-mail to employees. I am very sad to tell you that I've just been fired over the phone by Yahoo's chairman of the board. It has been my pleasure to work with all of you and I wish you only the best going forward.
The method of her ouster was viewed as tactless by many, especially considering so few top tech executives are women. In her blunt style, Bartz told Fortune that Yahoo had f----d her.
Both Yahoo and AOL -- once two of the biggest, most-profitable tech companies in the world -- have faced stiff challenges amid a changing landscape now dominated by Internet companies such as Google Inc. and Facebook Inc.