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Yahoo! shares surge 10% on Microsoft takeover rumour

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Yahoo's website
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Yahoo is one of the internet's best-known brands

Shares in the internet portal firm Yahoo have leapt 10% on rumours that Microsoft is considering a second attempt at a takeover.

Microsoft, which last bid in 2008, joins a host of other companies which are considering buying Yahoo, one of the internet's best-known brands.

China's giant internet company Alibaba has already said it might buy Yahoo.

Rumours of a bid from Vodafone also pushed shares in Blackberry maker, Research in Motion, 12% higher.

Yahoo shares jumped 10.1% to close at $15.92 and Microsoft shares ended 2.2% higher at $25.89.

Yahoo's current market value is $20bn (£13bn), compared with Microsoft's previous bid of around $45bn.

Neither party has made any official comment.

Microsoft is said to be divided as to whether it would make sense to mount such a bid.

Reasons in favour include the ability to beat AOL as a competitor by creating a stronger web portal.

Market share

Microsoft already has an agreement with Yahoo involving its Bing internet search engine, which powers Yahoo's search but gives 88% of advertising revenue back to Yahoo.

Combing the two could give Yahoo 30% of the US search market, according to analysts.

According to the latest figures from research firm comScore, Google has 64.8% of the US search market, Yahoo has 16.3% and Microsoft 14.7%.

But Yahoo is seen as lacking in growth potential.

Early last month, Yahoo fired its chief executive in a row over the company's future direction.

It said last month that it had received "inbound interest" from a number of parties.

Sid Parakh, analyst at fund firm McAdams Wright Ragen, told the Reuters news agency: "There are many reasons why this thing probably makes sense.

"If you strip out the variety of assets Yahoo owns, you are pretty much paying nothing for the core business."

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