When Michael reported yesterday that former AOL head Jon Miller was hoping to buy Yahoo! for over $20 per share, I did a double take. Yahoo! Inc. (NASDAQ: YHOO) has been floundering for the better part of 2008, and has seen its stock price plummet and its founder step down as CEO after a disastrous run that included the rejection of a $45+ billion takeover offer from Microsoft Corp. (NASDAQ: MSFT). One would think Yahoo! is a company without direction or drive, even with its huge, world-leading global eyeball audience.

The fact that Yahoo! has one of the top web audiences on the entire planet but can't seem to monetize it properly is a case study for future business courses. But the real question is why anyone would still want to buy such a directionless company? Enter former AOL head Jon Miller, who is reportedly trying to raise over $28 billion to buy the company for a huge premium over its closing price of $11.15 yesterday. Although Miller is an excellent high-tech leader who could probably do better than most in improving Yahoo!'s fortunes, are backers going to fund him to the tune of $28 billion?

Can Yahoo! ever regain even a piece of its former glory? Highly doubtful -- and it's incredibly hard to see financiers following Miller's logic in this economic environment and shelling out tens of billions to buy the company. Will any of them even be able to issue debt in this environment? Cowen's Jim Friedland indicated to Barron's that "the company will continue to lose share in search and that user engagement with its portal will decline over time." And that, folks, is the killer. If Yahoo! starts losing engagement over time, the game is over. This decline began a few years ago and will likely gain steam in the next two years.