Yahoo can't just sit there and do nothing, unless it wants its stock to be worth slightly less than, well, US currency. So it seems to have three options:
Option No. 1: Yahoo buys AOL. What that does for either party in the long run is a little unclear. It's more like a frog that's about to be eaten by a snake and puffs itself up so it can't be easily swallowed. But all you end up with is a bruised, puffy frog.
Option No. 2: Microsoft just buys the parts of Yahoo it likes (search and advertising) leaving ... what? Yahoo 360? Yahoo has a massive online audience -- 142 million uniques a month in the US alone, per Comscore -- but without ads they're stuck relying on someone else (i.e., Microsoft or Google) to help them monetize it. That's not pretty.
Option No. 3: Fairy godmother steps in, makes everything right. And the man in the Tinker Bell costume is ... Rupert Murdoch?
In a word, Eww.
One thing is for certain: This story is not over. And thus, I'm not done writing about it. Somebody just shoot me, please.
I never met a metaphor I didn't like.