The software maker is once again on speaking terms with the Internet company, though several sources tell News.com that an outright purchase is not currently on the table.
Microsoft and Yahoo are like two teenagers who can't decide whether to go steady, break up, or just be friends.
They are once again speaking to each other, as News.com first reported on Monday. Several sources tell CNET News.com that the latest talks involve a deal short of an acquisition.
"I can tell you categorically that's not happening," one source familiar with the situation said of the possibility of a full-on acquisition. Earlier in the day, TechCrunch reported that Microsoft was interested in buying all of Yahoo, though at a lower price than the $33 a share it was once willing to pay.
Another source pointed out that Microsoft's latest statement (issued June 12) remains true--basically that Microsoft is not interested in a full purchase but remains open to talking about a search deal.
In any case, it appears Yahoo investors see any interest from Microsoft as a good thing. Shares of the company rose above $23 a share on Tuesday, though they gave up some of those gains up later in the session, changing hands recently at $21.82, up 1.7 percent, or 37 cents.
The moves come as Yahoo is gearing up for a road show to fend off a proxy bid from Carl Icahn.
News.com's Stephen Shankland and Dawn Kawamoto contributed to this report.