In the wake of suppositions related to a possible acquisition of Yahoo by Microsoft, while both companies declined any comment, contradictory reports dispelled the possibility of a purchase. The market fluctuated following initial rumors that Microsoft had debuted an aggressive negotiation campaign for the acquisition of Yahoo. The shares of the Sunnyvale, California based Internet giant soared, increasing to their highest value in the past year, fueled by the take-over reports. In this regard, Yahoo stock experienced a boost of over 19%.

While both Microsoft and Yahoo declined to comment on what both companies referred to as suppositions, third party sources did confirm merger talks. And the fact of the matter is that Microsoft and Yahoo have considered a matchup, due to the fact that banding together would generate a new front against Google. The negotiations, that were confirmed to have cooled down without a consistent result, reveal increasing unrest for both Microsoft and Yahoo over the increasing dominance of Google.

Yahoo's market value is currently estimated in the vicinity of $50 billion, which would make a potential acquisition by Microsoft the largest take over that the Redmond Company has ever operated. By comparison, Microsoft itself is evaluated at in excess of $300 billion. At this time, contradictory reports are still in the wild, revealing either that the acquisition negotiations are in full throttle or that a merger is not considered, and that the two companies are rather leaning towards another form of collaboration.

"Positively, in our view, an acquisition of Yahoo! would provide Microsoft with technology assets, advertising relationships, and "eyeballs" to prove its seriousness in this market. Negatively, large deals carry significant risk, not least being Microsoft's ability to retain Yahoo! talent. Thus we'd prefer more of a stock-based deal with strong lock-in for current yahoo! employees. We also believe a champion would also have to rise within Microsoft--perhaps Ray Ozzie--to ensure the success of the acquisition," commented analyst Sarah Friar of Goldman Sachs.