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.