Microsoft may be looking to make another bid for Yahoo, and could be looking for a partner to help in that bid.
Such a bid would be the second trip to the altar for the two after Yahoo rejected a 2008 bid by Microsoft to acquire the company. It would also bring together two giants of the Internet business who have been looking for ways to compete against Google, including a partnership in the all-important Internet search business.
News about Microsoft's interest in bidding for Yahoo was first reported by Reuters, which said that Microsoft is one of several companies looking at acquiring Yahoo.
Other potential buyers of Yahoo include three large U.S.-based investment companies, a Russian investment firm, and Chinese e-commerce giant Alibaba, Reuters said.
If Microsoft and potential partners were to bid for Yahoo, they would be getting quite a deal compared to what Microsoft had originally been willing to pay to acquire it.
Microsoft in February of 2008 made a formal bid to acquire Yahoo for $44.6 billion, which at the time was a premium of over 60 percent over Yahoo's market capitalization.
However, Yahoo resisted the bid, saying it could do better. Microsoft eventually increased its bid to up to $47.5 billion, or $33 per share, and talks between the two dragged on for most of the year, but Yahoo declined the acquisition bid in November of 2008.
According to Reuters, one group of Microsoft executives is interested in pursuing an acquisition of Yahoo as a way to eliminate AOL as a competitor, while another group would rather invest in a company which is showing a higher growth potential than Yahoo.
Yahoo, whose share prices on Wednesday rose 10.1 percent to $15.92 on word of a possible bid, currently has a market capitalization of $20.1 billion.
Despite Microsoft's failed bid to acquire Yahoo, the two have become close partners in the Internet search business as a way to combat the dominance of search engine giant Google.
Yahoo and Microsoft in 2009 said they will work together in the online search and advertisement business, with Microsoft's Bing powering Yahoo's search capabilities and Yahoo becoming the exclusive worldwide relationship sales force for both companies' premium search advertisers.
Microsoft's share prices rose 2.2 percent to $25.89, but were off from a Wednesday peak of $26.16 after word of its potential bid for Yahoo broke.
Both Microsoft and Yahoo declined to comment further about the potential acquisition bid.