• Bloomberg News, Monday, April 13, 2009 11:45 AM

By combining its search business with that of Microsoft Corp., Yahoo could reap as much as $450 million in profit, analysts said. Last Friday, Kara Swisher reported in D: All Things Digital that Microsoft CEO Steve Ballmer and Yahoo CEO Carol Bartz began talking about a possible partnership.

In an interview with Bloomberg News, Sanford C. Bernstein analyst Jeffrey Lindsay said the partnership was likely to happen. "Yahoo is really the only independent option Microsoft has," he said. "Microsoft has to try to do a deal because it's all they've got left to try to stay in the online area." Because of this, Lindsay added that Bartz should be able to squeeze "top dollar" out of cash-rich Microsoft to the tune of $250-$450 million.

Yahoo's stock has declined 52% in the past year. During that time, the company staved off a rather hostile acquisition attempt by Microsoft and saw a search tie-up with Google thwarted by regulatory concerns. The company has also further developed its search engine, recently adding a research tool that helps users track and take notes on their query results. Microsoft, meanwhile, continues to lose buckets of cash in its online business. Its MSN unit has experimented with new business models and new ways of presenting Web search results, and is now testing a new search engine under the codename Kumo.com.

Read the whole story at Bloomberg News »