Yahoo rolls out new ad system as AOL move returns

San Francisco  - Yahoo on Wednesday rolled out a new online advertising system aimed at boosting revenues as its board authorized fresh negotiations with Time Warner for the purchase of its AOL unit.

The board meeting Tuesday was the first since activist investor Carl Icahn was granted three seats on the board after agitating for a boardroom revolt over Yahoo's rejection of a 47.5-billion-dollar takeover by Microsoft.

The Wall Street Journal reported Wednesday that the board decision sanctioned secret negotiations that have been taking place between Yahoo and Time Warner. Yahoo has valued AOL at between 5 billion dollars and 8 billion dollars, while Time Warner is asking for 10 billion dollars.

The move came after Jeff Bewkes, Time Warner's chief executive, said last week that he hoped to reach a decision on AOL's future "fairly soon."

Analysts question whether a merger between Yahoo and AOL would greatly help either company as they try to compete with Google for online advertising revenue. Icahn has also questioned the move, saying last week that Yahoo's future still depended on reaching an accommodation with Microsoft. He told financial news channel CNBC that Yahoo would "have to do something with Microsoft or Google is going to kill them."

Microsoft however insists that it is no longer interested in buying Yahoo and announced this week a 40-billion-dollar share buyback program.

The new ad program, called APT, allies Yahoo with almost 800 newspaper publishers to offer advertisers the choice of banner ads across both national and local markets. The new system allows newspapers to take advantage of Yahoo's ability to target advertisers according to their online behaviour - promising to dramatically raise the rates they charge for online ads.

"We challenged ourselves to make the whole process of doing business in the digital world easier, more transparent, and more profitable," said Yahoo chief executive Jerry Yang. "APT from Yahoo is all about spending less time managing digital advertising and spending more time delivering business results." (dpa)

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