Microsoft is once again trying to team up with Yahoo to challenge Internet search and advertising leader Google, although at this point the renewed talks haven't escalated to another attempt to take over Yahoo.
The Redmond, Wash.-based software maker disclosed the revived discussions Sunday without providing any specifics about the nature of the deal being explored except to say it involved bolstering the companies' position in the online search and advertising markets.
"Microsoft is considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo," the statement said.
Microsoft emphasized that it hasn't resurrected a $47.5 billion takeover bid that its chief executive, Steve Ballmer, withdrew after Yahoo CEO Jerry Yang -- acting on behalf of Yahoo's board -- demanded an additional $5.5 billion.
But Microsoft left open the possibility that it might dangle another buyout offer of Yahoo, depending on how the discussions progress between the two companies and their respective shareholders.
Yahoo is facing intense pressure from its shareholders to reopen sales negotiations, with activist investor Carl Icahn threatening to replace the Sunnyvale-based company's entire board unless a deal can be working out before Yahoo's July 3 annual meeting.
Although Microsoft hasn't been in touch with Icahn yet, the software maker reached out to Yahoo after the billionaire revealed his plans Thursday to lead a shareholder mutiny, according to two people familiar with the current status of the discussions. These people requested anonymity because they aren't authorized to speak on behalf of the companies.
While raising the prospect of another takeover bid, Microsoft also said the talk could just as easily go nowhere.
Yahoo had no immediate comment Sunday.
The mere acknowledgment that Microsoft and Yahoo are at least talking again will cause more analysts and investors to conclude it's only a matter of time before the two sides work out an amenable deal.
The theory that Microsoft would eventually renew its takeover attempt helped cushion the blow to Yahoo's stock since Ballmer withdrew an oral offer of $47.5 billion, or $33 per share, after Yang held out for $53 billion, or $37 per share, during a May 3 meeting in Seattle.
Yahoo shares ended last week at $27.66, down by just $1, or 3%, since Ballmer walked away from the discussions.
Despite the intensifying pressure from Icahn and some of its major shareholders, Yang and Yahoo Chairman Roy Bostock reiterated last week that they won't sell the company for less than the board believes.
While Yahoo's board has set a $37-per-share target, many analysts believe Microsoft could probably seal a deal by offering $34 or $35 per share.