Yahoo! Tries to Thwart Microsoft

Yahoo! Inc. has been busy this week.

The Internet search engine signed a test deal with Google Inc. for outsourcing ad search sales and, sources told the Wall Street Journal, is working to combine operations with AOL, owned by Time Warner Inc. The latter move would hinder Microsoft Corp.’s attempts to buy Yahoo, inside sources told the WSJ.

There could be a problem, though. The WSJ reported that Microsoft is talking with Rupert Murdoch’s News Corp. about jointly bidding for Yahoo!. The WSJ is owned by News Corp. If the deal materialized, it would combine News Corp.’s MySpace, Microsoft’s MSN and Yahoo!.

Meanwhile, the AOL-Yahoo! deal would include the repurchase of some Yahoo shares at a price above Microsoft's offer, the WSJ reported.

Microsoft first announced its intention to buy Yahoo! in early February for $44.6 million. Yahoo! has been resisting the unsolicited bid since, saying that the offer undervalues the company.

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