Is Microsoft gunning for Yahoo again?

The will-they-or-won't-they questions are heating up again.

For weeks now, the blogosphere has been awash with speculation that Microsoft may make a new play to acquire Yahoo, which has seen significant upheaval since the firing of CEO Carol Bartz early last month.

The Wall Street Journal reported early Thursday that Microsoft execs are discussing a Yahoo acquisition. Citing unnamed sources, the Journal reported that Microsoft is working with Silver Lake Partners, a private equity firm, to put together a bid for Yahoo.

Silver Lake Partners., a tech investor, has bought stakes in Skype, Seagate Technology and Avaya.

The newspaper reported that the deal being considered would include funding from banks and Silver Lake, along with a major investment from Microsoft.

After the report, Yahoo co-founder Jerry Yang said during a conference in Hong Kong that the company isn't up for sale.

"The intent going in is not to put ourselves up for sale," Yang said, according to a BusinessWeek report . "The intent is to look at all options. There's plenty of options for the board, and plenty of options for our shareholders to realize value."

Analysts say the speculation, and Yang's response, indicate that Yahoo is in turmoil and industry players are trying to figure out how that could benefit them.

"It's not surprising to hear that there are companies circling Yahoo," said Dan Olds, an analyst with The Gabriel Consulting Group. "It's normal and natural when someone as high-profile as Yahoo gets teed up."

Olds noted that he would be surprised if Microsoft wasn't considering another attempt to buy Yahoo. Back in 2008, Microsoft offered nearly $45 billion for Yahoo but was turned down.

Just this week, Microsoft CEO Steve Ballmer said during a presentation at Web 2.0 Summit that he's glad the 2008 deal fell through. "Sometimes you're lucky," he said.

However, Ballmer also was quick to praise Yahoo . "There's a lot of great things at Yahoo," he said. "Our alliance is important. They have one of the biggest, most vibrant audiences on the Internet."

Those kind words could be a sign of things to come.

"Ballmer is certainly saying the kinds of things that you might expect from someone who might be kicking some Yahoo tires," said Olds.

"As for Yang's comments about Yahoo not being for sale, well, put that under the 'ploy' heading. I think Yahoo is definitely looking for a buyer or a merger. By making some statements backing away, they're hoping that playing hard-to-get might pump up their value a bit more," Olds added.

Zeus Kerravala, principal analyst with ZK Research, said Microsoft may be interested in Yahoo, but an acquisition wouldn't be a good idea.

"They're both chasing Google and they both have their own issues," said Kerravala. "Taking two guys with broken legs and putting them together doesn't let you run any faster.... Microsoft plus Yahoo doesn't create incremental value."

On the other hand, Enderle Group analyst Rob Enderle said that with some work and reconfiguring, Yahoo could prove to be a smart addition to Microsoft. For instance, he noted that Yahoo Mail would be a good addition to Microsoft's own Hotmail email service.

Though Yahoo isn't the dominant Internet company it once was, Enderle maintains that it still has a strong stake in the online world. "At the right price, they do have value," he said.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin , or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com .

Read more about internet in Computerworld's Internet Topic Center.

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