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New York Times-affiliated website AllThingsDigital recently reported that, both to Microsoft and Yahoo! spokesmen, the latest speculation over a possible buyout of Yahoo!’s search business by the Redmond-based software giant are “total fiction” and very far from being feasible at this point.

The rumor, latest of many, originated yesterday from London-based Sunday Times’ report according to which the world’s second online search business might be acquired by Microsoft for $20 bn. The journal, which didn’t cite its sources, said the proposal involved a complex transaction that would see the U.S. software giant support a new management team to take control of 30 percent of Yahoo! and draft an option for a complete company buyout at the end of a 2-year period.

Still according to the Times, Microsoft would put up $5 billion to back Jonathan Miller, the former chief executive officer of AOL, and Ross Levinsohn, a former president of Fox Interactive Media: Miller and Levinsohn would then seek to raise an additional $5 billion from institutional investors to buy a 30 percent stake in Yahoo.

As pointed out by some, such a rumor was hard to believe since its inception: a $20 bn acquisition of Yahoo! is unlikely at this point, since the entire market capital of the Web company is, following its six-months decline, only at $16 billion.

Rumors like this have been continuously spread throughout the media since the refusal of Microsoft’s initial offer, and both parties have been consistently denying them so far: some would say their only tangible effect have been the repercussions in the stock market, where an occasional good news for Yahoo! resulted in a temporary surge in the company’s stock price, which would however fall back during the following days.

Among the many false rumors that have been circulating in the last few months, a fake email with the news of an imminent acquisition — allegedly sent from Yahoo! CEO Jerry Yang to the company employees — raised the company market capital by over 12 percent. Other factors that contributed to a temporary and frantic price change include bold or misunderstood statements from both parties, such as the recent declaration from Yang that in his own opinion “the best thing for Microsoft would be to buy Yahoo!”.

The latest rumor from the Sunday Times appears a bit different from the previous ones in that it is fairly rich in details, quite an unusual feature for an article that is not citing sources. Apart from the already mentioned $5 billion acquisition of a 30 percent stake, the Times article goes on to say that the investors would have the right to appoint three of Yahoo’s 11 board directors; that the talks with Yahoo involve Microsoft obtaining a 10-year operating agreement to manage the search business; and, finally, that Microsoft would also receive a two-year call option to buy the search business for $20 billion.

Putting acquisition rumors aside for the moment, analysts do however agree that substantial business partnerships between the two companies are not unlikely to take place in the future, especially since the much rumored about Google-Yahoo! search advertising deal came to pieces as the Mountain View, California-based search engine had to back out from the deal because of anti-trust issues raised by the US Department of Justice earlier last month.

While a partnership between the two main players in the search engine war could have generated worries from advertisers, who would have then seen over eighty percent of the market dominated by a single player more or less able to set its own prices, a collaboration between Microsoft and Yahoo! does however not seem unlikely, at least in the perspective of fighting the increasing Google supremacy in the field.

As the CNN website reported yesterday, such a deal would make a lot of sense and is especially supported by Carl Icahn, the billionaire investor who made news last Friday because of his massive Yahoo! stock acquisition that now put him in possession of as much as 5.5 percent of the company.

Today, the Yahoo! stock closed at $10.74 a share, still benefiting from the wave of Icahn’s acquisition that managed to give investors more confidence in the company. Several market analysts suggest that, given the historic low of the company, this might be a good moment to buy or at least hold stocks in the company for a long term investment, although the situation is still considered too unstable to generate what is generally known in the finance jargon as a clear “buy/sell signal”.