Yahoo may consider Google alliance, source says

Yahoo Inc would consider a business alliance with Google Inc as one way to rebuff a $44.6 billion takeover proposal by Microsoft, a source familiar with Yahoo's strategy said on Sunday.

Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid, that source said. At $31 a share, Yahoo believes the bid undervalues the company, two sources said.

A second source close to Yahoo said it had received a procession of preliminary contacts by media, technology, telephone and financial companies. But the source said they were unaware whether any alternative bid was in the offing.

In a memo to Yahoo employees on Friday, which was obtained by Reuters on Sunday, Yahoo leaders wrote: "We want to emphasize that absolutely no decisions have been made -- and, despite what some people have tried to suggest, there's certainly no integration process underway."

Separately, Google fired back on Sunday at Microsoft Corp's bid to acquire Yahoo, accusing Microsoft of seeking to extend its computer software monopoly deeper into the Internet realm.

Microsoft's proposed merger with Yahoo would combine the No. 1 and No. 2 suppliers of Web-based e-mail, instant messaging (IM) and portals, which act as starting points for hundreds of millions of users seeking information on the Web.

A person familiar with Google's thinking said the company believes Microsoft is using the same playbook it did in the 1990s to switch Windows users away from Web browser pioneer Netscape Communications to its own Internet Explorer.

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