Facebook IPO: Will Yahoo Board Approach for Reverse Takeover?

If Facebook's much-anticipated IPO is off for the year, would its crackerjack board of directors now consider buying Yahoo in a reverse takeover?

In Silicon Valley and on Wall Street, highly paid investment bankers are gathering. Yahoo's remaining directors met Wednesday to consider strategic alternatives for their company, which is now advised by Allen & Co., which has a big media practice and some well-connected bankers like former Sen. Bill Bradley, a 2000 Democratic presidential candidate.

Facebook, meanwhile, has its own links to Goldman Sachs, which invested $450 million itself in the Palo Alto, Calif., Web site and created a special purpose vehicle restricted to international investors that brought in another $1.5 billion. The Financial Times reports the IPO has been stalled.

But now that Facebook shares are held by more than 500 of its 2,000-plus employees, the company will be legally required to report its financial results. The deadline is the first quarter of 2012. For valuation purposes, Goldman suggested Facebook was worth as much as $50 billion.

Merely filing financial reports with the U.S. Securities and Exchange Commission would open a great big window on Facebook, for the first time revealing just how profitable it is. This month alone, Reuters reported annual revenue exceeds $1.5 billion and the Financial Times, also quoting insiders, put the mark at $2 billion.

Yahoo, based in Sunnyvale, Calif., was itself a highly anticipated IPO in 1994, when it first disclosed its profitability. Private Google in Mountain View, Calif., posted financials with the SEC in early 2004 and then went public in August 2004.

Rather than wait, Facebook founder Mark Zuckerberg and COO Sheryl Sandberg, a Google alumna, might prefer buying up Yahoo now, selling pieces they don't want, such as investments in international Web sites China's Alibaba and Renren, both now public, and then changing the name to Facebook.

Yahoo's enterprise value, the amount looked at it by the bankers, is $15.86 billion, now slightly higher because of activist investor Daniel Loeb's 5.2 percent purchase of Yahoo shares. His Third Point hedge fund has filed with the SEC for permission to buy more.

Yahoo also has cash and investments exceeding $3.25 billion, which could attract Facebook or someone else. For sure, it has already tempted Loeb.

The Facebook-Yahoo deal could provide a shot in the arm for Yahoo. It would energize its advertising reach if combined with Facebook. Then Zuckerberg and his team could decide how to handle search, or maybe to discontinue it. They could also determine how the future of Yahoo Mail, especially as Google rolls out more Google+ accounts.

Angry Yahoo shareholders who watched the drama over the firing of CEO Carol Bartz would surely be pleased. Most likely, a large group of Facebook employees would become instant millionaires.

That's a tall order, especially in very volatile stock markets, where IPOs are few and far between and many technology ones are underwater. Zuckerberg's co-directors include Marc Andreesen, the Netscape developer whose 1995 IPO was sensational; Netflix CEO Reed Hastings and Jim Breyer, the Accel Partners venture capitalist who helped take public companies like AOL, Macromedia and Hyperion Solutions.

Yahoo is scheduled to report third quarter results Oct. 18, probably before it finds a new chief. Facebook and Goldman Sachs could act before then, should Zuckerberg give the order.

Of course, Zuckerberg, 27, could also wait. Maybe a call from Chief Yahoo Jerry Yang, 42, could get the wheels spinning.