Yahoo!'s (YHOO) new hard-charging chief puts the big Microsoft (MSFT) - Get Report buyout dream to rest, as Wall Street ponders other less sensational strategies.

Incoming Yahoo! CEO Carol Bartz wasn't greeted with the most rousing ovation this week. The stock is down 5% since Bartz was first named the

front-runner

by Kara Swisher's BoomTown blog last week. Nothing against the former

Autodesk

(ADSK) - Get Report

exec, but shareholders appear to have had their hopes on a man in that role, specifically Microsoft's CEO Steve Ballmer.

After watching a $33-a-share, $44.6 billion Microsoft takeover bid slip away a year ago, it's got to be a little humbling to realize that the final payoff is a possible outsourcing deal with Microsoft for Yahoo!'s search business.

But it's been a rather humbling year, with the recession, the collapse of the credit markets, a climbing jobless rate and a sharp drop in consumer spending, to name a few economic ills. So given all the woes, a search deal with a deep-pocketed Microsoft has a few fans.

Microsoft-Yahoo!'s Hurdles

Google's

(GOOG) - Get Report

proposed and later killed Yahoo! search joint venture provides a recent blueprint to how the deal would work. And, as some have

pointed out

, the federal antitrust scrutiny Google-Yahoo! received will probably visit any Microsoft-Yahoo! pact.

Bartz's appointment clears "the last hurdle before Microsoft could submit a possible search deal proposal to Yahoo," wrote Collins Stewart analyst Sandeep Aggarwal on Wednesday. The presumed revenue-sharing arrangement could be worth $8 to $10 a share to Yahoo!, Aggarwal said, adding that it would give Bartz more time to focus on Yahoo!'s other businesses.

With online ad spending falling, search volume declining and ad prices dropping, Yahoo! faces a difficult year on the search front. One quick remedy to the high costs of staffing and operating a search ad delivery network is getting someone else to do it. Yahoo! could cut a big portion of its operating costs if Microsoft handled the freight and shared the take with Yahoo!

Meanwhile, Bartz could attempt to reinvigorate Yahoo!'s slumbering display ad business.

"Yahoo's graphical ad customers are the cream-of-the-cream," says one former Yahoo! employee who now works on the buy side. "They have the scale" in display to be able to work with the buyers, maybe dropping unit prices in exchange for more volume, says the analyst. "In a tough environment, they could maintain and even gain market share."

For Microsoft, which faces a steep erosion of its PC software franchise with the rise of Window's-free netbook computers, the Yahoo! search deal would put the software shop a big step closer to the online market. Previous efforts by the Redmond, Wash., tech giant -- WebTV, Hotmail, .Net etc. -- haven't exactly been soaring successes.

In a telling move last week, Microsoft won a key spot in mobile search in an upset victory over Google. Microsoft outbid Google to land Verizon Wireless' plum search slot on cellphones.

Adding Yahoo!'s mobile search traffic to Microsoft's Live effort would be create a far more formidable competitor to Google. And that, of course, is what all this is about.