Microsoft has made a fresh approach to partner with Yahoo, but any moves stops short of an acquisition.
Microsoft admitted it was in fresh talks over the weekend, two weeks after its proposed acquisition of Yahoo fell through.
Redmond said, "In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo, Microsoft is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business."
It went on, "Microsoft is considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo, but not an acquisition of all of Yahoo.
"Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo, or discussions with shareholders of Yahoo or Microsoft or with other third parties."
The approach came days after Carl Icahn, a Yahoo activist investor, put pressure on Yahoo to reopen talks about selling itself to Microsoft.
Icahn has already put up an alternative slate of directors to run Yahoo, after increasing his stake in the firm.