Shares of Yahoo! surged upwards by 7% yesterday on news the former CEO of AOL, Jonathan Miller was mounting an independent take-over bid. As reported in yesterday’s Wall St. Journal, Miller is actively trying to acquire Yahoo! with an offer in the range of $20 – $22 per share.

While many commentators in the financial and marketing sectors cast doubt on Miller’s chances to mount a successful take-over, favourable interest in the attempt demonstrates a belief Yahoo! could be a viable operation under the right leadership.

Virtually everyone, including folks at Yahoo! has conceded dominance in the search space to Google. What tends to be forgotten when people write-off Yahoo! as a second ran in search is that Yahoo! remains the world’s largest content network and the most visited domain on the Internet. Yahoo! is still an online superpower but it has languished under its current and previous leadership for over half the decade.

The saddest irony in the recent Yahoo! sob-saga (which we will try really hard NOT to recount unless absolutely necessary) is that the path they pursued several years ago might actually have been a fertile one in the business and development climate of late 2007 and early 2008. In an alternative universe most remaining Yahooligans really wish they lived in right now, Yahoo! could have used its insanely massive content network to leverage some premium entertainment content out of the major television networks and music studios.

Under the previous former CEO Terry Semel, Yahoo! had been following a get Hollywood and professionally produced content scheme. It was establishing a grassroots news bureau and developing a publishers’ content network to allow independent webmasters to distribute licensed content as they saw fit. The entire scheme could have been monetized through the reinvigorated Yahoo! Search Marketing platform, Panama.

In this alternative universe, Yahoo! would have been doing something useful during the lost half-decade the past five years have turned out to be. In the real world however, they didn’t. Their 2003 – 2007 bid to build a licensed content network backfired, mostly because conditions were not quite ready. The great stuff Yahoo! did accomplish in that time (and there’s a lot of great stuff in Yahoo!’s stable) tended to be classed or out marketed by rivals, or out of vogue by time of release.

To repeat an oft written mantra, over the past five years Yahoo! has created great products, maintained and expanded a fine search engine, built a capable paid-search advertising system and grown the largest content network in the world. Unfortunately, it has done all this in the shadow of a greater Google.

Even though Google looms over the industry with an awe inspiring dominance, don’t count Yahoo! out just yet. Even though Jon Miller might not be able to assume sufficient debt to buy Yahoo! outright, there is still a lot of public and capital interest in the old purple cow.