"A downside of mergers is that they can be distracting and, depending on what it is you're doing they can slow down your execution in other areas," Enderle said.

Because AOL has been paring down its menu of sites and online services, it now has a considerably smaller roster of products than Yahoo, so the best move would be to keep AOL operating as an isolated, stand-alone group that doesn't interfere with big, ongoing projects like Y OS, he said.

On the advertising systems front, a combined Yahoo-AOL would create a mishmash of products that both companies have been trying, independently, to rationalize and integrate, processes that are very much ongoing.

"Certainly, there's some logic to the idea [of a merger] from a business standpoint, but there are many complex integration issues that would have to be resolved for a merger like that to be effective," said Andrew Frank, a Gartner analyst.

"It's not clear to me how long and costly such an integration would be since both of these companies have made so many acquisitions [in recent years] that they haven't fully integrated into their own architectures. That would be my main concern about the deal," Frank added.

In addition, the overlap in operations would likely dictate severe workforce reductions that could hurt employee morale, which is already low in both organizations, especially at Yahoo, whose turnover rate in high-profile positions has been extensively documented in recent months.

AOL would be unlikely to solve the big problems that are dragging down Yahoo, including Google's massive domination of search advertising and Yahoo's need to become more nimble in its technology development and innovation.

"Buying AOL doesn't necessarily help Yahoo very much in terms of fixing any real problems Yahoo is having," Enderle said.

What a fusion would do is bring together two struggling Internet companies that have common goals, Enderle said. "AOL would be much better off as part of Yahoo than as part of Time Warner because in theory AOL is worth more to Yahoo than to Time Warner," he said.

The acquisition would also eliminate a competitor and prevent Google or Microsoft from strengthening their menus of products by buying AOL, which Time Warner is openly seeking to get rid of, Enderle said.

On the regulatory front, since AOL and Yahoo are major players in display advertising, such as banner ads, it's not inconceivable that the U.S. government might take a slow, close look at possible antitrust issues involved in a combination of the companies. "That's a likely possibility," Frank said.