Microsoft to Buy Yahoo Again!*

*A month later, Microsoft makes an official offer of $31 a share.

The Post's Microsoft (MSFT) moles report that Redmond is considering making another run at Yahoo (YHOO), this time by making its informal offer public. This rumor rolls around every few months, and one of these day's it's going to happen, especially if Yahoo's stock continues to tank.

As we've argued, the Internet industry will not support four major generalists--Google, Yahoo, AOL, and MSN--and two of them need to combine. We like the Microsoft-Yahoo combination a lot, but we think a simple Microsoft swallowing of Yahoo would be a disaster. We think Microsoft should sell its Internet business to Yahoo in exchange for a significant chunk of equity. The resulting public entity would be able to recruit top talent, more effectively compete with Google, and operate independently of the Windows/Office machine.

Of course, that would only happen over Steve Ballmer's dead body. What might happen is that Microsoft will buy Yahoo outright, perhaps by making an offer that Jerry & Co. can't refuse (let us pray). Then the combined company will slowly die within the Redmond whale, as its primary mission becomes to defend the Windows and Office cash cow.

But we're getting ahead of ourselves.  For now, let us once again obsess about the possibility of a Microsoft-Yahoo combination. (And then, if we get bored of that, about an AOL-Yahoo one):

Microsoft-Yahoo:
How to Structure a Microsoft-Yahoo Deal
One Problem With a Microsoft-Yahoo Deal: MSN is Only Worth $10 Billion
Proof that Microsoft Plans to Buy Yahoo?

AOL-Yahoo:
Playing the AOL-Yahoo-Microsoft Chess Game
Why Yahoo Should Buy AOL
Why Microsoft Will Steal AOL from Yahoo

The Web War is Over and Microsoft Lost:
MSN: Still Sucking Wind After All These Years

Disclosure: Henry Blodget has long-term positions in Yahoo, Time Warner, and Microsoft