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Microsoft Still Has Eyes for Yahoo

Microsoft Still Has Eyes for Yahoo

Microsoft's COO says the company still wants a relationship with the number two player in online search.

More than a year after Microsoft first bid for Yahoo and nine months since the courtship unraveled, yet another Microsoft executive dropped a hint this week that the software titan would still like to work out some kind of search relationship with Yahoo.

Microsoft's Chief Operating Officer (COO) Kevin Turner told London's Times Online in an interview on Monday that Microsoft (NASDAQ: MSFT) is still open to a deal.

"They have a new CEO, and she's formulating her business plans," Turner told the Times Online reported.

A Microsoft spokesperson verified what Turner is quoted as saying.

The intrigue between Microsoft and Yahoo (NASDAQ: YHOO) began 13 months ago when Microsoft launched a $44.6 billion hostile takeover of the number two search engine company,in order to prop up its own limping, single-digit search market share.

Yahoo, under co-founder and CEO Jerry Yang, successfully warded off Microsoft's attack and Microsoft abandoned the bid. Since that time, there have been repeated reports of the two firms negotiating over some kind of relationship regarding Yahoo's search assets. However, no deal has emerged so far.

That may change under new Yahoo CEO Carol Bartz, who previously was CEO of Autodesk.

"We've certainly made her aware and the Yahoo board aware that if they are ever interested in an opportunity to partner with them on search, we'd like to sit down and at least have the conversation. It has to make economic sense to both parties," the article went on to say.

Two other high-level Microsoft executives, CEO Steve Ballmer and CFO Chris Liddell, have both recently said publicly that they would be interested in some kind of business relationship with Yahoo under Bartz. They have not given any details of what a deal might look like, though.

Bartz, to date, has given no solid indications of whether she will or won't pursue a relationship with Microsoft. Still, some analysts expect a deal eventually, simply because of their joint adversary - Google (NASDAQ: GOOG).

"Microsoft and Yahoo sort of need each other," Michael Dortch, principal analyst and managing editor of DortchonIT.com. "It's like that old saying that 'the enemy of my enemy is my friend'."

Whether or not Microsoft's continued wooing of Yahoo and Bartz will work, however, it's obvious that Microsoft is still looking for an advantage.

"This is the time to buy almost anything at a discount," Dortch said. "I think he's [Turner] serious and his intentions are honorable but don't confuse honor with altruism," Dortch added.

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