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[Ballmer] said that if Yahoo! were still interested in a search deal, then Microsoft would be. "I think it is an interesting possibility to look at a search collaboration with Yahoo! as we had proposed last summer. There's no active discussion on that front. But we'd be very open to it. But acquisition discussions are finished."
IMHO the rest of the Yahoo portal is not really compatible with what MS is bringing online with its new Live offerings. It's hard to see how that would be integrated into the MS world.