Microsoft Seeks Partners For a New Run at Yahoo

Microsoft Corp., positioning itself for a new run for Yahoo Inc.'s search business, has approached other media companies in recent days about joining it in a deal that would effectively lead to Yahoo's breakup, say people familiar with the discussions.

Microsoft has held discussions with Time Warner Inc. and News Corp., among others, say people involved in the talks. In the past, Microsoft has floated an arrangement under which it would acquire Yahoo's search business and another partner, such as News Corp.'s MySpace or Time Warner's AOL, would combine forces with what remained of Yahoo. News Corp. is the owner of Dow Jones & Co., publisher of The Wall Street Journal.

Some of the people familiar with these talks say they are preliminary and unlikely to result in a deal with Yahoo. Indeed, two weeks ago, Microsoft Chief Executive Steve Ballmer called Yahoo Chairman Roy Bostock to suggest they meet to discuss a new idea involving other partners, according to a person familiar with the matter. The meeting, scheduled for Monday, was subsequently canceled by Microsoft, which Yahoo took as a sign that Mr. Ballmer's efforts to find a partner have so far failed.

Microsoft's overtures are the latest in a takeover battle for Yahoo that has gripped Wall Street and Silicon Valley for nearly half a year, leaving both sides bruised and scrambling to address strategic shortcomings in their businesses. Both tech giants are now feeling increasing pressure to reach an agreement, but their recent moves show they remain far apart on what such an agreement should look like.

Microsoft, which made its unsolicited proposal to acquire Yahoo in January, later withdrew its bid for the whole company, after resistance from Yahoo to name a price and opposition from Microsoft's own executives and shareholders. As recently as a few weeks ago the company ruled out buying all of Yahoo. It sees acquiring Yahoo's search business as the quickest way to gain the assets it needs to take on Google Inc.

Yahoo, it has meanwhile emerged, may have been more eager than it initially let on to sell the company in one piece. In mid-May -- weeks after Microsoft withdrew its bid -- Yahoo offered to sell itself to Microsoft for about $33 a share, a price Yahoo had earlier rejected, say people familiar with the talks. Microsoft rebuffed the advance.