Microsoft might not want it all

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Microsoft confirmed Sunday that it is talking to Yahoo about some sort of partnership that would fall short of a full buyout.

The software giant didn't provide specifics, though it also noted that it still hasn't ruled out a takeover of the No. 2 Internet search company.

Microsoft attempted to buy Yahoo for $47.5 billion, though the per-share price of $33 was deemed about $4 shy of what Yahoo was looking for, so negotiations ended. Apparently, though, Microsoft still thinks it needs Yahoo — and vice versa — to do battle with Google, so discussions of a vague nature have resumed.

"Microsoft is considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo," Microsoft said.

Since Microsoft pulled its $33-per-share offer, financier Carl Icahn announced that he is running a slate of 10 directors to unseat Yahoo's current board at the July 3 shareholders meeting. Icahn's purpose is to resurrect sale talks between Microsoft and Yahoo and close a deal.

The Icahn development has some analysts speculating that the renewed pressure on Yahoo will encourage CEO Jerry Yang to try and split the difference with Microsoft CEO Steve Ballmer and perhaps ink a deal for as much as $35 per share while avoiding a potentially damaging proxy battle.

"There of course can be no assurance that any transaction will result from these discussions," Microsoft said.
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