Update on Yahoo and Microsoft Talks

We reported a few weeks ago that rumors of Micro-Hoo were flying again and those rumors just might be turning to reality. According to Kara Swisher, Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer met face-to-face last week to discuss a partnership.

In reference to "cautioned sources close to Yahoo," Swisher says the talks are not in an effort to reignite the original acquisition deal. Instead, the discussion involves a partnership in the areas of search and advertising.

Ballmer has publicly stated on several occasions that Microsoft is interested in buying Yahoo's search business or their search advertising business. However, many reports also reveal that Yahoo is determined to keep their search business under their own control.

Microsoft wanted to acquire Yahoo primarily to fight the search-dominant Google. The latest surveys show Google with 63 percent of the search market share, Yahoo at No. 2 with 20.6 percent, and Microsoft coming in at a very distant third with 8 percent.

Last month at a media conference, Ballmer said:

"Unless I'm fooling myself, over time I would expect there's a good opportunity for a deal."

In spite of whatever is truly going on behind those closed doors, Wall Street and investors from both parties are encouraged by talks of a deal.

Both Yahoo and Microsoft declined to comment on this report.

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