Microsoft Likes Search Deal With Yahoo

Microsoft is interested in resuming talks on a Web search partnership with Yahoo. Yahoo shares fell 19 percent on the remarks, after gaining this week on renewed investor hopes that Microsoft may refresh its bid for the Internet company after Yahoo Chief Executive Jerry Yang announced that he would step down.

Microsoft withdrew its $47.5 billion buyout offer for Yahoo in May after Yang and his board rejected the bid as too low. The software company then offered to buy Yahoo's search business, but Yahoo decided instead to sign a search advertising deal with Google Inc

The Google deal has since fallen apart, after opposition from U.S. antitrust regulators who were concerned about an alliance between the Web's two biggest search companies.

Microsoft has said that it was still interested in pursuing a search deal with Yahoo. There's no active discussion on that front but Microsoft would be very open to it.

Ballmer said that Microsoft is looking for areas to cut costs, including hiring, which "points to much, much slower growth...in head count for the remainder of this financial year and that he suspects into next financial year.However, investment in research and development would continue.