Talks between Microsoft and Yahoo on a merger are no longer active even as possiblities of mutal cooperation still remain between the two.
Though merger talks were no longer active, the door was still open for them to cooperate, potentially as part of a partnership or joint venture in which Microsoft would spin off some of its online properties to Yahoo, a report in the Wall Street Journal said.
The report said both the companies discussed a "possible merger or other match-up that would pair their respective strengths."
Yahoo stock price jumped by 10 per cent on the Nasdaq Stock Market on Friday, following reports the company was exploring a merger with Microsoft, as the two IT giants struggle to gain market share from mutual rival Google Inc.
Shares of Yahoo gained USD 2.80, or 10 per cent, to reach USD 30.98 on the Nasdaq Stock Market. According to media reports Microsoft has held talks in recent months to either buy Yahoo for up to USD 50 billion or forge a partnership.
The negotiations were aimed at allying two of the biggest players on the Internet, whose combined strengths in search, e-mail and instant messaging could provide a counterweight to Google's online dominance, reported the San Francisco Chronicle.
Analysts and investors supported the idea of them both combining forces, calling their products complementary. However, they were mixed on whether acquisition was a wise solution, with some saying there were a number of potential pitfalls involving control, culture and cost.
Both Microsoft and Yahoo declined to comment.