Yahoo shares up on Microsoft takeover hopes

SAN FRANCISCO – Yahoo Inc.’s stock price soared more than 10 percent late Wednesday on hopes that its once-spurned suitor, Microsoft, will return with another takeover bid now that the struggling Internet company is mulling a possible sale.

Reuters reported late in the day that Microsoft Corp. is considering whether to make an offer, and that fed the takeover speculation that has swirled around Yahoo Inc. since it fired Carol Bartz as CEO five weeks ago.

The story cited unnamed sources that Reuters said included a high-ranking Microsoft executive saying there’s disagreement within Microsoft on whether it makes sense to pursue Yahoo again more than three years after being rebuffed.

A Microsoft spokesman declined to comment.

Yahoo’s shares reached $16.15, their highest point since Bartz’s Sept. 6 ouster, before retreating to close at $15.92, an increase for the day of $1.46, or 10.1 percent. They fell 46 cents after hours.

Microsoft is widely viewed among investors as the most tantalizing candidate to buy Yahoo because the world’s largest software maker has the cash to pull it off and a history with its rival that makes a takeover seem like a realistic scenario.

But making a case for Microsoft to buy Yahoo still requires wishful thinking. That’s partly because Yahoo and Microsoft are now bound together in an Internet search partnership that gives Microsoft less incentive to buy Yahoo outright. Microsoft also is facing a challenge with personal computer sales slowing that could make the headaches that would accompany a Yahoo acquisition even less attractive.

Determined to narrow Google Inc.’s dominance of the lucrative search market, Microsoft had offered $31 a share for Yahoo in early 2008. It eventually sweetened the bid to $33 per share, or $47.5 billion, but withdrew the offer when Yang held out for more.