And the beat goes on

Microsoft has released a statement on a potential "transaction with Yahoo but not an acquisition of all of Yahoo."

"There of course can be no assurance that any transaction will result from these discussions," Microsoft stated, but it also said it "reserves the right to reconsider [buying Yahoo] depending on future developments and discussions that may take place" with Yahoo, its shareholders or third parties.

Sources for Furrier.org are more specific about the "transaction":

"Yahoo and Microsoft […] are bunkered down in a Palo Alto hotel hammering out the final stages of a transaction that will have Microsoft picking up the Yahoo search business. Word is that this deal will be done this week."

In a release of its own, Yahoo reiterated, "we remain open to pursuing any transaction which is in the best interest of our stockholders."

A successful purchase of Yahoo's search service would come as a blow to Google, which has been working with Yahoo on a sponsored search alliance.

Microsoft may also pursue a buyout of Facebook, where it already owns a minor stake. BusinessWeek writes, "Microsoft could pick up both Yahoo’s search business and Facebook and combine them into something to rival Google, thanks to Facebook's closely guarded and potentially valuable social graph information."