Yahoo, Microsoft: Off again ... on again?

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"They need this deal, despite Steve Ballmer’s protestations to the contrary, and despite the prevailing wisdom that the merger would be unsuccessful," he wrote. "I don’t see a good alternative acquisition. ... If Microsoft fails here, and continues to mishandle its damage control around Vista, then the company will be in a bad place. The setback won’t be irreparable, but it will be significant."

Financial analysts, too, believe a deal may still be imminent. In a research note earlier this week, Piper Jaffray analysts Gene Munster and Vivian Li wrote that there "are still many pieces and players that need to sort out before the dust truly settles."

"We continue to believe that Microsoft needs help to create a formidable online advertising presence and believe Yahoo still makes the most sense as an acquisition," the analysts wrote.

A Citibank research note by analyst Mark Mahaney, published Tuesday, also mentioned that a deal between the two companies is a possible scenario for Yahoo's future.

For that to happen, Microsoft and Yahoo would have to see the error in their ways now that they've parted. If fallout from Yahoo shareholders proves too daunting for the company's board to handle, and Microsoft can't see another way to quickly revive its Internet business, the potential is there for a Microsoft-Yahoo partnership to blossom again.