Nasty memories have been stirred up by this week's reports that Microsoft is in talks to buy a big stake in America Online. After all, the last time that AOL was involved in a big deal-its $150 billion acquisition of Time Warner, a media giant, in January 2000—it soon came to symbolise the madness of internet-company valuations, during the turn-of-the-century dotcom bubble. Nobody expects Microsoft to repeat the near-suicidal folly of Time Warner. But if there is any truth to market rumours that its purchase will value AOL-now a shadow of its old self-at over $20 billion, or about $1,000 per AOL subscriber, then the deal would certainly fuel fears that irrational exuberance is returning to the pricing of internet-related firms.
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