Microsoft has contacted Yahoo! over the last few days to explore the possibility of buying part of the online search engine, and hinted that it may still consider launching another bid for the entire group.
It is thought that the new talks have centred on merging the two companies’s online search businesses.
proposal be accepted by Yahoo!, it could help the internet company to avoid a damaging proxy fight with Mr Icahn.

Neither will release specifics, but the transaction reportedly would fall short of a full acquisition of Yahoo by the software giant.
By Joseph Menn, Los Angeles Times Staff Writer
ahoo shares and nominated a slate of directors that he indicated would try to sell the company if they were elected at Yahoo's annual meeting July 3.

By Nancy Kercheval and Amy Thomson May 18 (Bloomberg) - Microsoft Corp., the software maker that withdrew its $47.5 billion offer to buy Yahoo! Inc., proposed an alternative transaction to the Internet company and said it may still consider a full acquisition.
The new proposal wouldn't involve buying all of Yahoo, Redmond, Washington-based Microsoft said today in a statement. Microsoft said it isn't pursuing a bid to buy the whole of Yahoo ``at this time.''
e of Yahoo, he said.

MicrosoftMSFT is again looking to strike a deal with Yahoo! - although this time it's not a full acquisition.
The Redmond, Wash.-based software giant early this month scrapped its plans to acquire the Internet search outfit after Yahoo! CEO Jerry Yang rejected a sweetened bid. Since then, however, activist investor Carl Icahn has launched a proxy fight to replace Yahoo!'s board in an effort to get Yahoo! to restart negotiations with Microsoft.
h other third parties."

SEATTLE (AP) - Microsoft Corp. said Sunday it is talking to Yahoo Inc. about a transaction that doesn't involve a full buyout like the software maker's $47.5 billion offer that fell apart earlier this month.
Redmond, Wash.-based Microsoft walked away May 3 from its offer to buy the Web pioneer. Since then, billionaire investor Carl Icahn has launched an effort to oust Yahoo's board.
oo," the statement said. "Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo or discussions with shareholders of Yahoo or Microsoft or with other third parties."

SAN FRANCISCO -(Dow - As Carl Icahn's proxy fight has raised the noise surrounding Yahoo Inc. (YHOO), the silence from the company's erstwhile suitor, Microsoft Corp. (MSFT), is leaving Wall Street perplexed.
Observers are left to make educated guesses about Microsoft's stance, which could be the deciding salvo in the proxy fight. Three theories seem to be emerging: first, Microsoft remains interested in Yahoo, and may even have covertly signaled as much to Icahn, but is remaining silent as a negotiating tactic; second, the company has actually moved on, as it has publicly stated; and, third, the company remains undecided.
ake educated - sometimes well-argued - guesses based on the few facts available.