The successful completion of the current talks would mark an end to Microsoft’s 18-month pursuit of Yahoo, which began with an unsolicited full takeover bid that rocked the Internet world. Since last summer, the software giant has been pushing for a looser alliance that would combine the search technology and search advertising systems of the two companies and give them a better chance to catch up with Google. The talks picked up steam late last week after the two sides reached the outlines of a deal in which Yahoo would not receive any up-front payment, as Microsoft had initially offered in the middle of last year, but the two sides would divide future search advertising revenues. For Yahoo, the partnership would bring an influx of cash at a time of declining revenue in its search business. Carol Bartz, brought in as chief executive from outside the company after the debacle of last year’s public break-up of the Microsoft talks, has continued to pare staff since taking over in January.
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