The stock of the Sunnyvale, California company rallied sharply Friday morning after the New York Post and the Wall Street Journal newspapers reported that Microsoft may want to buy the firm in what could be a 50-billion-dollar deal.

The two companies have been long rumored to be weighing an alliance to better compete with Google in web search and online advertising, after they partnered earlier to gain ground on the younger but more aggressive giant. Officials of Yahoo and Microsoft declined to comment on the news Friday.

Even if the two giants were able to reach a deal, they would account for 32 percent of the U.S. market, still far behind Google's 54 percent, according to industry analysts.

Some Internet experts said that a possible deal to combine Yahoo and Microsoft may not be enough to halt Google and its growing dominance of the Internet advertising market.

However, a Microsoft-Yahoo combination would create a potent force in display advertising, an area in which Google is playing catch-up. Yahoo and Microsoft each attract more than 100 million U.S. visitors a month to their websites.

Analysts said the two companies could find ways to work together short of a merger, such as combining their Internet search businesses.

The New York Post reported Friday that Microsoft has intensified its pursuit of Yahoo and has requested formal talks, while the Wall Street Journal suggested Microsoft could go for a smaller deal, spinning its online group into Yahoo in return for a stake in Yahoo.

A report said that top Yahoo executives could be an obstacle toany deal with Microsoft, as co-founder Jerry Yang dislikes the maker of the Vista operating system.