Shares of Yahoo vaulted $1.49, or 7.4 percent, to $21.69 Wednesday morning in the wake of a report that Microsoft is talking to potential partners about a deal to split up Yahoo’s assets.

Microsoft would land Yahoo’s search business, under the scenario, while potential partners Time Warner or News Corp. would get the rest of Yahoo’s assets, according to a Wall Street Journal report.

The Journal story, quoting unnamed sources, also said that on May 17, Yahoo Chairman Roy Bostock offered to sell the company for $33 to $34 per share, but that Microsoft dismissed the overture. Yahoo earlier had been demanding $37 per share, while Microsoft had made an oral offer of $33 per share.

Yahoo’s offer followed a breakdown in negotiations on May 3, when Microsoft had said it was ending its pursuit of all of Yahoo. Instead, Microsoft pressed ahead in pursuit of a deal that would give it Yahoo’s search business.

On June 12, Yahoo clinched a search-advertising  alliance with Google designed to provide several hundred million dollars of incremental revenue yearly.

Software behemoth Microsoft meanwhile is seeking to stem the momentum of Google, which dominates Internet search and search advertising.

On Tuesday, Microsoft acquired Powerset, a San Francisco semantic search startup, for an undisclosed amount.

Shares of Microsoft fell $.53, or 2 percent, Wednesday morning to $26.34.

Separately, Microsoft on Wednesday announced that it is launching an online subscription version of its Office software suite. The package, Microsoft Equipt, will cost $69.99 for a one-year subscription and will include security and computer management features.

Microsoft’s Office suite  has been a cash cow for the Redmond software maker, but it has come under threat from a growing lineup of online software suites from rivals including Google.