Upgrade to Apple Watch Series 8? National Coffee Day Fitbit Sense 2 'Hocus Pocus 2' Review Kindle Scribe Amazon Halo Rise Tesla AI Day Best Vitamins for Flu Season
Want CNET to notify you of price drops and the latest stories?
No, thank you

Yahoo-Microsoft deal less likely, analyst says

The likelihood of a search partnership has dropped in recent weeks and is now just 50-50, says Collins Stewart analyst in a research note.

In Vegas terms, the likelihood of a Microsoft-Yahoo search deal is now a "pick 'em."

That was the takeaway from a report Tuesday by Collins Stewart analyst Sandeep Aggarwal.

"In our view, the likelihood of a Microsoft-Yahoo search deal has gone down materially in recent weeks," Aggarwal wrote in a research note. The biggest hurdle remains the price of a deal, he said.

"We believe that a Microsoft-Yahoo search deal can happen but we are reducing the probability from 80 percent-plus to 50 percent, and with the lowered probability, we restrain ourselves in terms of assigning any timeline," Aggarwal wrote.

Of course, a historian might also offer the same caution. Microsoft first went public with a bid to buy Yahoo early last year. The two sides never came to a deal, despite a few months of negotiations.

For the past year, Microsoft has indicated it is open to some sort of a search partnership short of an outright deal, but the two sides have remained far apart on price, Aggarwal said.

When Carol Bartz was hired as Yahoo's CEO, hopes for a deal increased. The two sides have resumed talks, and while Bartz has said she is open to some sort of deal on the right terms, she has sounded less than optimistic at times. (See video below of Bartz on Fox Business News.)

Despite some good early traction for Microsoft's Bing search engine, Aggarwal said the software giant can ill afford to wait, particularly since it has no other means of significantly boosting its search share.

"As far as Microsoft is concerned, it cannot afford to wait for long because Bing can help Microsoft (bridge) the gap in core relevancy, etc. but cannot deliver 20 percent search share (required to remain sustainable/meaningful in search)," Aggarwal wrote. "In addition, Google is getting more aggressive both in search and online applications and Microsoft cannot delay much the adoption of Cloud Computing (in absence of viable/scalable online ad business model)."