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A statement from Microsoft says it is "considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo." It has not clarified what that alternative might be.

In the statement Microsoft emphasised it was not proposing to make a new bid to buy all of Yahoo, after recently being rebuffed, but could reconsider.

Microsoft walked away from its pursuit of Yahoo after three months of negotiations after the company's board rejected its $47.5 billion offer.

The New York Times claims the proposed deal may see Microsoft and Yahoo form a partnership or joint venture for search-related

However, sources report Yahoo is continuing to talk with Google about a search advertising partnership and a deal could come as early as this week.

Responding to the statement, Yahoo claims its board will "evaluate each of our alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximising stockholder value."

Analysts divided

"I definitely think an alternative deal is better than a full acquisition," says Toan Tran, an analyst at Morningstar. "It is positive for both companies, because you are getting the benefits of a Yahoo acquisition without the negatives, namely the integration risks."

But Kim Caughey, a senior analyst at Fort Pitt Capital Group, claims a joint venture or minority investment with Yahoo could cause confusion about who is in charge.

"Microsoft walking away from Yahoo was a total head fake," says Caughey. "Microsoft is a terrible poker player if it thought people were going to believe that the deal was dead."

The move follows the launch of a proxy bid by Yahoo investor Carl Icahn, who aims to replace the company's board of directors with the intention of forcing through Microsoft's bid.