online operations

In an assessment that could lead to a substantial charge against its future profits, Google Inc. believes its $1 billion investment in advertising partner AOL is souring.

The Mountain View-based company disclosed in a quarterly report filed late Thursday with the Securities and Exchange Commission that the 5 percent AOL stake that it bought in 2005 "may be impaired." Impairment is an accounting term used to describe an acquisition or investment that has eroded.

Microsoft has all but shut the door on the prospect of resuming talks to buy all or part of Yahoo. Speaking at the company's annual meeting for analysts on July 24, Chief Financial Officer Chris Liddell said a Yahoo deal at this point "essentially makes no sense."

Executives from Microsoft Corp. and Time Warner Inc.'s AOL are trying to advance discussions on a possible combination that could give the software maker an alternative to a deal with Yahoo Inc., a newspaper reported Wednesday.

Word of a meeting follows a breakdown in negotiations between Microsoft and Yahoo over the weekend, one that led activist investor Carl Icahn to step up efforts Monday to replace Yahoo's board in an Aug. 1 shareholder vote.

Banks have been disappointing customers in many ways lately -- tightening mortgage lending standards, paring back home-equity and credit-card lines and lowering savings interest rates -- but they're receiving higher marks for at least one thing: their Web sites.

Microsoft Corp.'s attempt to take over Yahoo Inc. has become so tortured it may help Internet search and advertising leader Google Inc. grow stronger, undermining Microsoft's main reason for pursuing the deal in the first place.

"We find this to be a very advantageous situation for Google," Cantor Fitzgerald analyst Derek Brown said Thursday. "The longer this gets dragged out, the better for Google."