Reports of an acquisition of Yahoo! by Microsoft appear to have been false.

Microsoft/Yahoo! deal stalls again

Rumours of Yahoo! getting snapped up by Microsoft, which led to a flurry of stock interest in Yahoo! last Friday, appear to have been a false alarm.

The story was initially broken by the New York Post, but the New York Times, referring to information from people briefed on the talks, said the discussions are part of an continuing dialogue that the two companies have been holding for more than a year, but are still in preliminary stages.

"One person briefed on the talks said that other forms of cooperation short of a merger were most likely," said the Times. Shares of Yahoo gained almost 10 per cent on the speculation, closing up $2.80. Microsoft shares fell by 41 cents.

"A person who had been briefed on the companies’ ongoing discussions said that a ‘creative partnership’ was a possibility," said the Times. "One option that had been discussed was the linking of advertising networks to generate additional Web traffic, according to a person briefed on the talks. Another possibility might be an Internet-only partnership, rather than an acquisition, this person said."

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