Yahoo! Continues Talks to Buy AOL: Report

Yahoo!(YHOO Quote) is continuing discussions to buy Time Warner's (TWX Quote) AOL business, Bloomberg reports.

Yahoo! and Time Warner executives have met in the past few weeks and continue to negotiate over terms, Bloomberg reports, citing two people familiar with the situation. Time Warner would hand over AOL's advertising business to Yahoo! in exchange for a stake in the combined company.

A deal would bolster Yahoo's position in the market for display advertising and add subscribers for services such as e-mail and instant messaging.

Differences remain between the two sides and an agreement may not materialize, two other people familiar with the discussions said, Bloomberg reports.

Microsoft(MSFT Quote) CEO Steve Ballmer said Wednesday his company is still interested in some sort of Web search deal with Yahoo! but is no longer interested in buying all of the company.

Yahoo! announced earlier this week that CEO Jerry Yang would depart, ending a reign in which he refused to sell the company to Microsoft.