Microsoft's alternative proposal for Yahoo includes buying its search
business, and taking a minority stake in the company, according to a Reuters
source. The move comes less than a week after billionaire Carl Icahn launched
a proxy battle for Yahoo.

Bobbi Rebell reports from New York.

After walking away from its rebuffed $33 a share bid, Microsoft is still
trying to get a piece of Yahoo.

A source tells Reuters that Microsoft has put forth an alternative proposal
for Yahoo-- to buy its search business, and take a minority passive stake in
the company after it spins off its Asian assets.

The proposal does not yet include a value for Yahoo's search business, and
it is little more than an outline at this point.

Microsoft emphasized that it was not proposing to make a new bid for all of
Yahoo, but could reconsider.

Analysts say Microsoft has a lot to gain:
Standard & Poor's Scott Kessler:
Scott Kessler, Equity Analyst, Standard & Poor's saying:
"Operationally, their Internet business amazingly continues to lose
money and that's something that I think the top brass at Microsoft cannot live
with over the long term."

The move comes less than a week after billionaire investor Carl Icahn
launched a proxy campaign to replace Yahoo's board with directors who would
re-open talks with Microsoft.

Scott Kessler, Equity Analyst, Standard & Poor's saying:
"There are a lot of egos involved here and that's one of the
reasons why we think that constructive conversations really did not occur
until like the 11th hour if you will, a couple of weeks ago . Now it seems
like Carl Icahn has injected himself into this situation and he is really
going to force the hands of both companies."

If a complete takeover deal is to happen-- the clock is ticking to avoid a
messy proxy fight at the next Yahoo shareholders meeting on July 3rd.

Bobbi Rebell, Reuters, New York.