search deal

In the latest development in the ongoing Microsoft-Yahoo saga, Redmond is showing renewed interest in a search deal with its struggling rival. After several failed attempts to acquire all or part of Yahoo, Microsoft CEO Steve Ballmer said the company should ink a deal to acquire Yahoo's search business "sooner than later," according to a report in The Wall Street Journal.

Microsoft Corp. is no longer interested in buying all of Yahoo Inc., CEO Steve Ballmer said Wednesday, though he told shareholders that the company would still be "very open" to a collaboration on Internet search. His comments sent Yahoo shares diving more than 20 percent.

"Let me be clear," Ballmer said at Microsoft's annual shareholder meeting. "We are done with all acquisition discussions with Yahoo."

While the world waits to see if Microsoft will take Yahoo up on its invitation to make another acquisition bid, Redmond on Monday announced another search deal with a different rival: Sun Microsystems.

Microsoft is chasing both Google and Yahoo on the search front. According to comScore, Google owned 63 percent of the U.S. Web search market in August. Yahoo grabbed 19.6 percent, leaving Microsoft with a mere 8.3 percent.

Shares of Microsoft Corp. sank more than 5 percent on Friday, a day after the company missed Wall Street's earnings forecast by a penny, and issued softer-than-expected guidance for the current first quarter.

Microsoft cited weakness in the online business, which makes most of its money from Web advertising.

With a Yahoo Inc. search deal uncertain at best, Microsoft also plans to invest hundreds of millions of dollars more than expected in the next year to whip its unprofitable online operations into shape.