When Jerry Yang, Yahoo co-founder and CEO, spurned Microsoft’s buyout offer earlier this year, he had promised brighter days ahead. Instead, the global market collapse has driven Yahoo’s market value to almost a fraction of what Microsoft had originally bid.

If Microsoft or any other buyer was to float a new bid offer, the acquisition would be far cheaper. Yahoo would more likely to be under greater pressure to accept it as well. Analyst Matt Rosoff, said Microsoft is less likely this time to bid for all of Yahoo. Its search engine, only No. 2 to Google’s, is Microsoft’s likely target.

Rosoff added Yahoo having driven down price would leave ample time on Microsoft’s side. The firm can afford to deploy money in its own search operations and only swoop in at a point when Yahoo is strapped.

“I think they are looking at them as a rapidly declining asset,” he felt

In February this year, Microsoft tried to purchase Yahoo in a mixture of cash and stock. The offer then marked a whopping 62 percent premium to Yahoo’s stock price. Microsoft later further sweetened its bid, an amount that Yang and also the board chairman Roy Bostock stated still undervalued Yahoo. This was in May.

Yahoo’s share price since then has halved. Analysts are seeing very few bright spots since they slash expectations for Yahoo’s core strength, Web display advertising, in the coming quarters.