Microsoft reconsiders buying Yahoo

Microsoft has signed a non-disclosure agreement with Yahoo that signals it's considering buying the search engine outright again, a source slipped out on Wednesday. The pact outlined by the New York Times would let it examine Yahoo's financials to see if a buyout would make sense. As Yahoo's conditions in the NDA would prevent collaborating on deals, it's possible Microsoft would go it alone on a takeover or wait until later to arrange financing.

Previously, had reportedly looked at partnering up with financiers like Silver Lake and even the Canadian Pension Plan Investment Board to split up the costs.

For Microsoft, an acquisition of Yahoo would be to ease jitters over its existing search deal, which uses Bing as Yahoo's primary search. Talk has circulated that the firing of CEO Carol Bartz and Yahoo's attempt at selling itself off will cast doubt on the deal and see Yahoo either revert to an in-house search engine or switch to a rival like Google. Microsoft made the deal to inflate Bing's market share and hopefully stem losses in its online division that continue to bleed hundreds of millions of dollars each quarter.

The company might be willing to come back to the table now that Yahoo is in a weaker state. Yahoo rejected an earlier takeover attempt potentially worth tens of billions of dollars. While still valuable, it's known to be worth considerably less after an overall decline in its properties' share.

An acquisition could still have significant ramifications for Internet services. Microsoft ownership would throw into doubt the platform neutrality of Flickr and other services and take out one of the few major web portals.

By Electronista Staff

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