TECHNOLOGY

YAHOO DROPS OUT OF TALKS TO BUY STAKE IN AOL

Yahoo, the most-visited Web site, dropped out of talks to purchase a stake in Time Warner’s America Online unit, leaving Microsoft and Google as potential bidders.

Yahoo “passed” on taking a stake in America Online or buying the business outright, a spokeswoman, Joanna Stevens, said yesterday, citing difficulties Yahoo would face in integrating the two companies. A Time Warner spokesman, Ed Adler, declined to comment.

“Yahoo had far less to gain from a relationship with AOL than did the other companies,” an analyst with Standard & Poor’s, Scott Kessler, said. He rates Yahoo shares “buy” and said he doesn’t own them. He said he doesn’t rate Time Warner shares and owns a small holding in the company.

The decision to pull out shows that Sunnyvale, Calif.- based Yahoo may hold a better position in the industry than some competitors, Mr. Kessler said. The company also has available a stable of Internet content, something potential suitors were looking to win from AOL.

Time Warner is in “serious discussions” with a number of potential partners on selling a stake in AOL, the largest American Internet access provider, the chief executive of Time Warner, Richard Parsons, said on an earnings conference call this month. He declined to name them.

The company held discussions with Redmond, Wash.-based Microsoft and with Google, a person familiar with the situation said last month. Comcast, based in Philadelphia, is also in discussions with Time Warner to join Mountain View, Calif.- based Google in a common bid for a stake in AOL, people familiar with the talks said.

– Bloomberg News

TRADE

DEFICIT BALLOONS TO A RECORD WASHINGTON – The trade deficit ballooned to a record in September as aircraft sales plunged amid labor unrest and the nation looked abroad for energy products in the wake of Hurricane Katrina.

Other economic data yesterday showed new unemployment claims climbed last week, but only mildly.

The deficit in international trade of goods and services widened 11.4% to $66.11 billion from a revised $59.35 billion in August, the Commerce Department said.

“That’s partly because of the Boeing strike and partly due to a surge in energy prices,” a UBS economist, James O’Sullivan, said. “It’s pretty clear the deficit is big, and there’s no sign of it getting smaller, even if this number is exaggerated.”

While oil costs have gone up this year, recent slippages in prices at the pump seem to be making consumers happier. The University of Michigan’s midmonth report on consumer sentiment for November increased to 79.9 from 74.2 in October.

– Dow Jones Newswires

IN BRIEF

The Blackstone Group wants to hire an investment manager to open its own hedge fund to collect more fee-producing assets … Satellite television and radio broadcasters must carry public alerts and warnings, the FCC said in an order posted on its Web site yesterday … Stocks rallied as a slump in oil prices and bond yields helped push the Standard & Poor’s 500 Index toward its highest close in six weeks. Wal-Mart Stores led an increase in retailers on optimism that lower fuel costs will help the consumer … Wal-Mart also is attracting to its Web site some of the affluent customers it can’t get to shop in its stores … Target said profit fell 18% from a year earlier, when it had a gain from the sale of Mervyn’s stores. Revenue rose 12% on demand for private-label apparel … H &M stores across Europe began selling a line designed by Stella McCartney yesterday in hopes of mimicking the success of Chanel’s Karl Lagerfeld. Citigroup analysts responded by cutting H&M stock to “sell” from “hold,” predicting that Paul McCartney’s 34-year-old daughter would have so little impact that 12-month same-store sales through November will be unchanged.

– Bloomberg News