Yahoo shares jump on latest Microsoft report

The stock price is up in morning trading, following a Wall Street Journal report that Microsoft may be seeking partners to make another run at Yahoo's search operations.

Update at 10:40 a.m. PDT, with analyst report on potential break-up of Yahoo and updated stock performance

Yahoo shares shot up 6 percent in morning trading Wednesday, on word that Microsoft may seek partners to make another bid for the company's search business.

The stock price jumped 6.3 percent to $21.48 a share early Wednesday, just a day after Yahoo's shares fell below $20 to come very near the level where they were trading prior to the start of Microsoft's buyout bid in February.

According to a report in The Wall Street Journal, Microsoft has been sidling up to other companies about teaming up to make a bid for Yahoo, a move that would result in a breakup of the Internet search pioneer, with Microsoft retaining the search portion of Yahoo's business.

Microsoft reportedly is talking to Time Warner and News Corp. about this arrangement, giving investors a sense of deja vu. Time Warner and News Corp. were among the white knights Yahoo had reportedly sought out after Microsoft announced its unsolicited bid.

Investors may want to keep in mind this one sentence in the Wall Street Journal report:

Some of the people familiar with these talks say they are preliminary and unlikely to result in a deal with Yahoo.

Meanwhile, analysts Clay and Fred Moran of the Stanford Group note in a research report Wednesday that breaking Yahoo's business is unlikely to "drive value" for Yahoo shareholders.

A potential break up of Yahoo's business would likely result in Microsoft acquiring Yahoo's search engine, while a large media company could merge its Internet properties with Yahoo, the report states. Yahoo's Asia assets and investments, meanwhile, could be spun off or sold.

"We find a breakup would not yield compelling upside from the current stock price," the research report states.

Should such a breakup occur, Stanford Group's "sum-of-the-parts" assessment would give Yahoo a value of $20 to $24 a share.

Featured Video
This content is rated TV-MA, and is for viewers 18 years or older. Are you of age?
Sorry, you are not old enough to view this content.

Details about Apple's 'spaceship' campus from the drone pilot who flies over it

MyithZ has one of the most popular aerial photography channels on YouTube. With the exception of revealing his identity, he is an open book as he shares with CNET's Brian Tong the drone hardware he uses to capture flyover shots of the construction of Apple's new campus, which looks remarkably like an alien craft.

by Brian Tong