Yahoo shares jump on latest Microsoft report

Update at 10:40 a.m. PDT, with analyst report on potential break-up of Yahoo and updated stock performance

Yahoo shares shot up 6 percent in morning trading Wednesday, on word that Microsoft may seek partners to make another bid for the company's search business.

The stock price jumped 6.3 percent to $21.48 a share early Wednesday, just a day after Yahoo's shares fell below $20 to come very near the level where they were trading prior to the start of Microsoft's buyout bid in February.

According to a report in The Wall Street Journal, Microsoft has been sidling up to other companies about teaming up to make a bid for Yahoo, a move that would result in a breakup of the Internet search pioneer, with Microsoft retaining the search portion of Yahoo's business.

Microsoft reportedly is talking to Time Warner and News Corp. about this arrangement, giving investors a sense of deja vu. Time Warner and News Corp. were among the white knights Yahoo had reportedly sought out after Microsoft announced its unsolicited bid.

Investors may want to keep in mind this one sentence in the Wall Street Journal report:

Some of the people familiar with these talks say they are preliminary and unlikely to result in a deal with Yahoo.

Meanwhile, analysts Clay and Fred Moran of the Stanford Group note in a research report Wednesday that breaking Yahoo's business is unlikely to "drive value" for Yahoo shareholders.

A potential break up of Yahoo's business would likely result in Microsoft acquiring Yahoo's search engine, while a large media company could merge its Internet properties with Yahoo, the report states. Yahoo's Asia assets and investments, meanwhile, could be spun off or sold.

"We find a breakup would not yield compelling upside from the current stock price," the research report states.

Should such a breakup occur, Stanford Group's "sum-of-the-parts" assessment would give Yahoo a value of $20 to $24 a share.

[JCPayne]

So Microsoft's plan now is to hostile takeover Yahoo. And So-- people can't resist and search with them anymore.... Microsoft will then dumb down the Yahoo service and the Internet to Microsoft's level so that can actually compete against Google....

[open-mind]

OK, Yahoo is far from perfect. However, In the past few years, Microsoft has become such a completely ineffective and dysfunctional company, that I can't believe the threat of being purchased by them would make anybody's stock go up. Amazing.

[Penguinisto]

It makes sense (the stock jump): Day-traders are still among us, even the stupid ones. :)

[jamalystic]

Microsoft again!! I don't really seems to understand their obsession on this deal. Are they telling us now that their online future is solely dependent on this deal materializing? Well, as one expert rightly pointed out, itseems Microsoft have really lost all initiative to make their online presence counts: Microsoft's Online Future: Forecast Hazy ( <a class="jive-link-external" href="http://www.internetevolution.com/author.asp?section_id=466&#38;doc_id=152918&#38;F_src=flftwo" target="_newWindow">http://www.internetevolution.com/author.asp?section_id=466&#38;doc_id=152918&#38;F_src=flftwo</a>)

[jaspal.m]

It is not dependent on yahoo! but while they try to run live themself,it will take years to mark google level(if they really could).and so by then,,google would have gone far far away....you can see that now..google have already offre free version of words...<br />so..to stop google microsoft have to act now..and the best way is to buy yahoo..(Thats common sense..all of us know that)(the competition is not just for search anymore)<br />And so they know that they are not good in search no matter how hard they try,,they really cant compete with google...but still they got to compete for themself(not for anyone who is against them)so they got to buy something which could compete google ,,and then after that only they could go further and figure how to win.<br />And then now you ppl would say i am with microsoft,,so what,,if you ppl can stand on opposite side why cant i be with them...