Microsoft (MSFT) told its employees that it offered Yahoo! (YHOO) $8 billion in cash for 16% of the company and $1 billion to buy its search operations.

According to Reuters, "The proposal also included a revenue-sharing partnership that would have delivered $1 billion a year in additional operating income to Yahoo due in part to a three-year guarantee of better rates for advertisements tied to its search results."

A Yahoo! partnership with Google (GOOG) does not appear nearly so good, although Yahoo! has opted to take it. The world’s largest search company may add $500 million to the operating income at Yahoo!.

The portal’s board screwed the company’s shareholders again.

Douglas A. McIntyre