Microsoft/Yahoo: Merger Out, Alliance In?

The Stalwart submits: The late word on Friday was that any discussion of a merger between Microsoft (MSFT) and Yahoo (YHOO) was off. But the latest is that the companies may still be talking about some sort of alliance to take on big bad Google (GOOG):

Discussions between the companies might instead be aimed at Microsoft investing in Yahoo or expanding their cooperation, for instance sharing advertisers or integrating advertising systems, analysts said.

Neither company commented on the reports of new merger talks, which first appeared in the New York Post yesterday and sent Yahoo shares up. Yahoo stock retreated by 1 percent in after-hours trading, after a report in the Wall Street Journal's online edition cited anonymous sources who said Yahoo had ended the merger talks. Microsoft stock closed at $30.56, down 41 cents.

Nobody knows whether this is true or not, but I'd argue an alliance of some sort is better than a merger. If something like this does happen, ideally it'd be under Yahoo's control, so that the Microsoft organization can focus on more important things.