A major Yahoo investor has been urging executives from both Microsoft and Yahoo in the past couple of weeks to revive their talks, and it looks like those efforts haven’t gone to waste.

A source at Microsoft told Fortune on Tuesday that while there was “no big deal” in the works – meaning a full acquisition of Yahoo – he implied that his company hasn’t ruled out the possibility of buying Yahoo’s search business. Shares of Yahoo had reached a five-month low Tuesday, but finished up nearly 3% after two tech blogs reported that Microsoft was revisiting its bid for the battered Internet portal.

The Yahoo investor said he has spoken with company board members about reconsidering Microsoft’s (MSFT) offers to buy the whole company and, failing that, part of it. Yahoo directors, the investor said, have admitted that they made miscalculations in negotiations with Microsoft CEO Steve Ballmer. “They dragged this out for a couple months and were shocked when Steve went away,” the investor said.

Calls to Yahoo were not immediately returned.

The Yahoo investor said that selling Yahoo’s search business to Microsoft is a far better alternative than its Google ad pact. Shares of Yahoo (YHOO) dropped nearly 18% in value after the company announced it ended buyout talks with Microsoft on June 12. Instead, it said it would ramp up an online ad partnership with Google (GOOG) that would run some of Google’s search ads. “I would take anything that beats the current status quo,” the investor said.

Shares of Yahoo have been steadily falling for the past two weeks after the company announced it ended buyout talks. On Tuesday, Yahoo’s shares opened at $21.18, the low since Microsoft made an unsolicited offer to buy the company on Feb. 1.

A Microsoft source shot down rumors that the software giant is again interested in acquiring all of Yahoo. Microsoft had previously offered $33-per-share for the company and walked away from that bid in early May. “Nothing has changed in that respect,” the source said. Asked if Microsoft was making a small deal, the source chuckled and said he had no comment.

Microsoft, however, has always been open to discussing an alternate deal. One day after Yahoo said talks were off for good, Microsoft’s top advertising executive Kevin Johnson revealed in a letter to employees that the company had returned with a partial offer to buy Yahoo’s search business for $1 billion and invest another $8 billion in Yahoo.

Silicon Valley blog TechCrunch on Tuesday cited sources who indicated that Microsoft and Yahoo were discussing a full buyout. CNET reported that a partial deal was being kicked around.

Wall Street analysts took in the latest rumors with mild amusement. Said Thomas Wiesel Partner’s Christa Quarles, “This is about the 8,000th time I’ve heard Microsoft is going to buy Yahoo. Everyone’s parsing out what their sources are saying or not saying. They’re reading tea leaves at this point.”

That said, both companies have reason to keep talking. Yahoo is under heavy pressure from dissatisfied investors, and it’s facing a brain drain as top employees leave for greener pastures. Microsoft, meanwhile, views Google as its biggest competitive threat and has yet to find an alternative to catch up to the search giant in the online ad market.

Analysts say they’re not convinced the deal ever went away because neither Microsoft or Yahoo have offered a better Plan B. Wrote Ben Schachter in a recent note to UBS clients, “We continue to believe that, at some point, Microsoft will acquire all of Yahoo. Unfortunately, for all of us that are beyond tired of the constant news flow and speculation around a possible Microsoft/Yahoo deal, the Google/Yahoo agreement will not put an end to this story as we still think Microsoft needs Yahoo.”