Microsoft seeks allies for new Yahoo move: report

NEW YORK (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) is preparing a new bid for Yahoo Inc's (YHOO.O: Quote, Profile, Research, Stock Buzz) search business and has approached other media companies about joining it in a deal that would effectively lead to Yahoo's breakup, the Wall Street Journal said.

Microsoft has already held talks with Time Warner Inc (TWX.N: Quote, Profile, Research, Stock Buzz) and News Corp (NWSa.N: Quote, Profile, Research, Stock Buzz), among others, the newspaper quoted people familiar with the discussions as saying.

The talks are preliminary and unlikely to result in a deal with Yahoo, the paper said.

The Journal said that two weeks ago, Microsoft Chief Executive Steve Ballmer called Yahoo Chairman Roy Bostock to suggest they meet to discuss a new idea involving other partners.

The meeting was subsequently canceled by Microsoft, which Yahoo took as a sign that Ballmer's efforts to find a partner have so far failed, the paper said.

Neither Microsoft, Yahoo, Time Warner nor News Corp were immediately available for comment.

Yahoo rejected a $47.5 billion takeover offer by Microsoft, and earlier this week questioned whether the software maker was ever serious about a full-scale merger. However, Yahoo remains open to discussing any proposal from Microsoft, the paper said.

In the meantime, Yahoo investor Carl Icahn is running a slate of directors to replace Yahoo's board and has called for the removal of Chief Executive Jerry Yang ahead of the company's annual shareholder meeting to be held in Silicon Valley on August 1.

The activist shareholder has said the company should still offer to sell itself, though Microsoft has said it is no longer interested in a full buyout.