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I recently speculated wildly on what Google would do with $6 billion in reserves.  And while I still think Google is looking at a major move on a well known company more evidence has come to my attention.

Evidence that perhaps points Google in a somewhat different but similar direction.  In this article I look at the new evidence and see how it could impact Google’s decisions.

Let’s review the facts:

A few months ago, Google started building a war chest.  $4 billion cash presumably needed to buy a company.

Google is expanding into every form of communication imaginable.  From email to video, blogging, IM, News and more.

But there are other areas that Google isn’t into yet.

In a recent article I speculated that Google may get into wireless in a big way by purchasing a major but struggling US wireless provider.

And while I think Google still needs wireless as part of its global domination strategy, there are other potential uses for that wad of cash in the bank.

I’m surprised Google hasn’t made a move yet, after all they’ve had that cash in the bank for almost 3 months now.  You’d think they would have bought something as soon as the all the checks cleared.

But now it appears that perhaps that money is for something else.  Something bigger.  Something where cash isn’t the only incentive.

I’m talking of buying at least a major stake in something much larger than a wireless company.

We also already know that Google is one of the front runners in a deal with Time Warner to get a stake in AOL.

But why would Google buy a failing ISP?  We already know that AOL users are flocking away in droves because of the increasing prevalence of broadband.  But AOL has been trying to work through that, attempting to supplant their subscriber base with advertising revenue (via their own products and Google).

One reason Google would buy a company like AOL is that they are masters at taking a product which was once paid for and giving it away and still make money on it.  (Think Google Earth, Picasa and more recently Google Analytics, formerly Urchin)

Of course, if Google were to get AOL, they would monetize it by increasing ad placements.

But why should Google stop with AOL?  Why not go for the whole ball of wax.  Why not try to get a majority stake in Time Warner.

Think about that for a second – a major (25-30%) stake in a true media company – not just the web properties (which by the way include DMOZ and Netscape among the list) but TV networks, movie distribution rights and more.

Time Warner is worth about $85 billion, roughly 2/3 Google’s current value.

So if you take the $4-6 billion in cash Google already has, and throw in another $15 to $20 billion in shares, Google could easily own a large part of Time Warner.

Why else do I think this is happening?

Well, there is other evidence that I came across today.

An article on the ZDNet blog indicates that Time released a bunch of IP addresses to Google, speculating that these will be used as part of Google’s new click-to-call advertising product.

But to me that’s just the first indication of a joint venture between the two companies.

Time signs over some IP’s but also provides the technology to switch from IP to regular telephony and they split the profits on the ad sales.

At the same time, both companies are testing the partnership waters.

This would be a good deal for Time, which has been struggling since early to mid 2002.  Shares were trading as high as $60 each in 2001-2002 but now rarely break the $20 threshold.

Google, on the other hand, has risen incredibly – from the opening price of $85 they are now closing on $450 per share.  Impressive growth for a company that’s been public for less than 2 years.

The numbers indicate to me that this would be a sweet deal for both companies, should they move forward.  Google would expand it’s reach into many more forms of communication while Time would ensure it’s name stays around for many more years to come.

Whether such a scenario would come to pass is anyone’s guess.  After all MSN is also supposed to be in the hunt for AOL.  Probably MSN’s interest is more at keeping Google out of AOL than anything, but I’d say the ZDNet article does point to where Time is leaning.  That is towards Google.

My only concern would be that we wouldn’t see a repeat of what happened when AOL and Time merged.

At that time AOL bought Time Warner.  Yet within a couple years AOL/Time Warner became just Time Warner again.

I would hope that if Google does become Time’s suitor that they don’t follow AOL’s lead and become just another footnote in Time Warner’s history books.

Rob Sullivan is a SEO Consultant and Writer for Textlinkbrokers.com