Quadrille - 3:45 pm on Oct 24, 2011 (gmt 0)
I'm with Leo, too.
It really is a most unlikely scenario, even though it would give momentary joy to the Google Haters ("There! We Told You So!" [yawn]).
Yahoo!'s services are too close to many of Google's for it to be allowed to happen, even if Google wanted it (why would they?) If the US didn't block such a deal, Europe certainly would!.
And Yahoo!'s finances are too close to M$ for them to allow it to happen.
Yahoo! is a mess; it peaked several years ago, and like all dot com has-beens, it's spiraling slowly down to ignominious defeat. I don't celebrate that; but it's a fact.
Stories like this usually come from overpaid and overconfident public relations idiots, secure in the knowledge that they will get paid, whatever damage they inflict on Yahoo! and its chances of a sensible deal with some non-Google company.
Having said all that, anything's possible. There is an outside chance that Google is engineering an asset-strip that would let them have something ... patents, for example ... while someone else picked up whatever's left. But it's very unlikely. Yahoo!'s value is in its users; break up the company, and the residual value is minimal. Like most Internet companies, the whole is infinitely more valuable than the component parts.