Yahoo! Might Not Look for Buyout Now

With Jerry Yang stepping down from the top position at Yahoo! (YHOO Quote), many expect the path is now clear for Microsoft (MSFT Quote) to swoop back in with a bid to acquire the ailing Internet search giant.

Some industry observers argue, however, that Yahoo! can remain a stand-alone business, and even succeed, if it were to stop entertaining thoughts of a buyout and instead come to an agreement with Microsoft on a paid-search deal.

Gene Munster, an analyst with Piper Jaffray, said in a research note to clients Tuesday that whomever Yahoo!'s board selects as a replacement for Yang will indicate whether the company has plans of either continuing to compete on its own or looking for a new acquisition or partnership agreement.

"Specifically, we believe the appointment of a well-known industry veteran with a solid track record would signify the intention to continue competing under its own control," Munster writes. "In this scenario, we believe that Yahoo! would likely continue to explore search outsource deals if they make financial sense to the company, but would also focus on strengthening its core display assets."

Earlier this year, Microsoft offered to buy Yahoo! for $33 a share, an offer that Yang famously said substantially undervalued Yahoo!'s assets. But Yang has had a hard time letting go of the topic, saying earlier this month that "the best thing for Microsoft to do is to buy Yahoo."

Of course, since Microsoft's initial bid fell apart, shares of Yahoo! have dropped precipitously.