Microsoft-Yahoo: Night Of The Living Acquisition Rumors

One thing that's not lifeless, though, is the rumor that Microsoft is eyeing Yahoo for a possible acquisition. No sir, this zombie, which last clawed its way out of the grave in May, is once again making the rounds, thanks to some rather bold statements from a Microsoft executive.

Last week, at Microsoft's annual shareholder meeting, Kevin Johnson, president of the vendor's platforms and services division, said Microsoft plans to boost its share of the online search market from 10 to 30 percent in the next five years, and grow its portion of the online advertising market from 6 percent to 40 percent during the same period.

Several prominent bloggers, including Henry Blodget, former senior Internet analyst for Merrill Lynch, seized on Johnson's statements as evidence that Microsoft may be finally ready to make a serious play for Yahoo, which owns 19.5 percent of the market, compared to 54 percent for Google, according to Nielson Online.

In fact, Blodget believes the only way for Microsoft to reach its lofty search and online advertising goals would be to buy Yahoo. And even though such a deal would be "disastrous to Yahoo" and create a significant tax hit for its long term shareholders, Blodget suggested that it's not out of the realm of possibility.

"If Microsoft comes in with a Murdoch-like offer, Yahoo won't be able to refuse," Blodget wrote in a Friday post to his Internet Outsider Weblog.

However, investors appear to be growing weary of the rumor, and probably wish it would take an extended dirt nap. Yahoo closed Monday trading down 6 cents at $26.76, and Microsoft was down 13 cents at $33.96.