(Updated with Yahoo statement) Microsoft tonight again reversed its stance on Yahoo and says it has suggested a new deal to Yahoo that would involve a compromise between the two companies. The Windows developer does not provide specifics but says it would be interested in a "transaction" that stops short of its earlier takeover bid. Microsoft is conditional in its notice and cautions that it reserves the possibility of a takeover depending on the nature of talks. There is also "no assurance" that anything will result from talks, the company explains.

Yahoo has yet to issue a response to Microsoft's offer.

The statement marks a warming of relations between the two technology firms, which chilled when Microsoft retracted its takeover attempt with claims that Yahoo was unwilling to come to terms and had been deliberately hurting the possibility of a takeover through strategic decisions. Yahoo has rebuffed the accusations with statements that Microsoft refused to move on its bid, but has also repeatedly said it would entertain further offers, including higher-valued bids from Microsoft itself.

Yahoo is now also under increased pressure to come to agreements with Google, Microsoft, and other partners in an attempt to fend off a proxy battle instituted by billionaire Carl Icahn, who hopes to force a deal with Microsoft by having shareholders vote in a takeover-friendly board of directors at Yahoo.

Update: Yahoo has confirmed that Microsoft is "not interested in pursuing an acquisition of all of Yahoo! at this time," according to an official statement. The company also says it is willing to look at any deal that improves its welfare and will not confine itself to a Microsoft agreement.