Report: Microsoft Considering Buying Yahoo, Again

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Microsoft is up to its old tricks. Vintage 2008, to be precise.

That’s at least according to a new report from Reuters, which suggests that the company is mulling a takeover bid for the embattled Web portal giant Yahoo in the wake of the abrupt firing of Yahoo CEO Carol Bartz last month.

Citing an unnamed high-level Microsoft exec, Reuters reports that “No decision has been made and a bid might not materialize as there are internal divisions at the software company on whether it should pursue Yahoo again.”

Still, the fact that Microsoft is even contemplating a bid for Yahoo is noteworthy given that it tried this once before in 2008 only to suffer embarrassment when Yahoo repeatedly rejected the offers.

Back then in February of ’08, Microsoft shocked the tech world by making a surprising, wholly unsolicited $45 billion bid for Yahoo, or $31 a share, a 62 percent increase over where they closed the day prior.

Yahoo rejected the offer, saying it was far too low. Microsoft hit back at Yahoo, calling the decision “unfortunate,” but three months later, returned with another, more secretive offer that reportedly increased the value of Yahoo shares “by several dollars,” or $5 billion in total, Yahoo again rejected that, saying its outlook for future growth was strong. Microsoft packed up and headed home in May.

Now, things are much different: after suffering a dramatic loss in revenue and clout, the company is worth closer to $18 billion, according to Reuters. It is reportedly being courted by numerous suitors, including private equity firms and fellow faded Web portal AOL. And the company’s board has apparently put off the search for a full-time CEO to replace Bartz, instead focusing on schemes to divvy up the company and sell its most high-prized assets, namely those abroad in China and Japan, to the highest bidder.

And there are good reasons to think a Yahoo/Microsoft combination makes sense: After all, the two companies have already teamed up on search, with Yahoo announcing in July 2009 it had moved to outsource its searches to Bing.

Investors appeared to like the idea. Yahoo’s shares rallied almost 9 percent Wednesday on the news to reach $15.75 a share.

We’ve reached out to Yahoo and Microsoft about the recent report and will update when we receive a response.

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