Will Microsoft team up with Yahoo?

There's nothing like a hugely long and prominent story in the Wall Street Journal to get people talking. This one wasn't on the front page, just the Money & Investing section. But hey, it's got a catchy headline: A Microsoft Yahoo Tie-Up?

The question mark is a dead give-away that the authors have no idea whether or not a deal will really happen. And we already blogged last week about news reports that eBay, Microsoft and Yahoo! might be teaming up to combat Google. This seems like more of the same -- lots of chatting yielding lots of options.

Here's the gist of it: Maybe Microsoft will take a stake in Yahoo? That's not all that likely, the article admits, but points out that as of May 8, MSN will be headed up by veteran deal-maker and former Ask.com CEO Steve Berkowitz. Microsoft has already signalled it has some appetite for dealing with other portals. Lest we forget, it was in serious talks with Time Warner a few months ago about joining forces with AOL, but that deal was scuttled when Google swooped in with a cool $1 billion for a 5% stake in AOL.

Frank Barnako at Barnako.com says, "Microsoft needs something!  Google and Yahoo have the Internet mojo right now. " He also links to Henry Blodget's post, "MSN: Another Quarter Closer to Irrelevant." Henry doubts MSN can ever be a serious challenger to Yahoo or Google on its own.

At the end of the story, the WSJ throws out that maybe Microsoft will sell MSN to Yahoo and take a minority stake in the portal? buygoogle.com says that is "terribly unlikely." I couldn't agree more. Microsoft has already taken a lot of pain in the past week for promising to spend big to get its Internet operations back on track. I can't see Ballmer backtracking that quickly.

Rafat at PaidContent notes, "this could be all smoke and mirrors for now..." And how.