Yahoo Inc.'s steadily sinking stock pulled out of its descent Tuesday on reports that the Internet pioneer is reconsidering its recent decision to fall into the arms of online search leader Google Inc. instead of Microsoft Corp.
The prospect of Yahoo spurning Google in favor of an alternative deal with Microsoft cheered investors still disillusioned with Yahoo's rejection of a $47.5 billion takeover offer from Microsoft.
Yahoo shares climbed 59 cents, or 2.8 percent, to finish Tuesday at $22.04 -- the stock's largest one-day gain in two weeks. The shares have been shriveling since Yahoo announced it will use Google's superior technology to show some ads on its Web site in the United States.
When it embraced Google, Yahoo terminated talks with Microsoft about a sale of the entire company as well as a more limited deal focused on Yahoo's search engine. That led to a 16 percent drop in Yahoo's market value, making it even harder for Yahoo board's to justify its decision to turn down Microsoft's last takeover offer of $33 per share. Yahoo CEO Jerry Yang had sought $37 per share.
Yang is now under intense pressure to prove Yahoo is worth as much as he thinks while also trying to fend off a shareholder revolt being led by activist investor Carl Icahn.
To make matters worse, Yahoo is facing a leadership vacuum created by the departures of several top executives and engineers. The Sunnyvale-based company is expected to address the exodus in a reorganization to be announced this week.
The backlash to the Google alliance may have prodded Yahoo to rekindle talks to sell its search operations to Microsoft as part of a $9 billion deal.
Technology news site CNet.com and the blog Silicon Alley Insider both reported Yahoo and Microsoft are once again exploring a more limited deal, perhaps at a higher...
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