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Redmond may be ready to pick over the carcass

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Microsoft is mulling the purchase of Yahoo! according to published reports that pushed up the share price of the declining portal site by about ten per cent in Wednesday's trading.

Reuters quotes a high-ranking Redmond executive as saying that the company is considering a bid for Yahoo!, possibly in association with another partner company, but that the deal is causing strong disagreement internally. Those keen on a deal are claiming the move would effectively knock AOL out of the industry, but others feel that it is better to invest in a company with growth potential, not with its best years seemingly behind it.

“Yahoo's value hasn't grown in years, and some executives feel we should buy something that is more forward-looking," said the executive, who spoke on condition of anonymity.

Microsoft has long had an interest in Yahoo!, with erstwhile CEO Jerry yang reportedly turning down a bid from his counterpart Steve Ballmer of more than $40bn a few years ago. That's more than double its current value. That decision was a factor in Yang’s resignation from the top job, when he was replaced with the recently-fired Carol Bartz.

Microsoft is not the only potential suitor however. Several private equity firms have been suggested as possible buyers and the company has reported receiving statements of interest from others, with Chinese portal Alibaba also mulling a bid.

If Redmond did take over Yahoo, the deal could provide a boost for the Bing search business, potentially giving Microsoft around 30 per cent of the search market. This could however attract the interest of the regulators, and it seems possible Microsoft would have to sell off part of the company to satisfy competitive concerns. ®

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