A unnamed source talking to Reuters revealed yesterday that Microsoft is considering a bid for Yahoo, currently estimated to be worth around $18 billion (£11.6 billion), after the internet search company publicly stated recently it was considering selling. The source is said to be a high-ranking Microsoft executive, who also said the purchase may not go ahead as there are internal divisions at the software giant on whether it should pursue Yahoo again after the failed takeover in 2008.

Many at the Redmond-based company do not believe Yahoo has the growth potential remaining to make it a good investment. Its value has remained rather static for years and many executives within Microsoft feel they should be purchasing a company more forward thinking than Yahoo is today.

Others, however, maintain that a Yahoo buyout would help the company create a stronger web portal in which to advertise and sell its products to businesses and consumers alike. Interest in the troubled Internet giant has also been shown from Providence Equity Partners, Hellman & Friedman, Alibaba Group and other currently undisclosed companies.

According to Reuters, Microsoft may seek a partner to go after Yahoo rather than making a bid by itself.

Earlier this week, Yahoo announced a deal with ABC News to use the media company's news content on its Yahoo News website, work jointly on journalism projects and sell web advertising.