Has Microsoft SINA the Light?

Is Microsoft (Nasdaq: MSFT  ) really eyeing Chinese new-media darling SINA (Nasdaq: SINA  ) as a potential acquisition? Barron's Eric Savitz reports hearing somewhat wacky buyout buzz from research firm Wedge Partners and rumor site TheFlyOnTheWall.com. But I wouldn't rush out to get the two companies a bridal registry present just yet.

It's easy to see why SINA might appeal to Microsoft. SINA is growing so nicely, even analysts can't keep up. China's online juggernaut has topped Wall Street's expectations for 12 consecutive quarters.

SINA is also expected to complete the acquisition of Focus Media's (Nasdaq: FMCN  ) meatiest out-of-home advertising businesses this quarter. Microsoft may not be able to catch up with Google (Nasdaq: GOOG  ) organically in paid search here in the U.S., but it stands a fair chance of mattering in China with a little help from SINA's growing client list. Buying SINA would come a whole lot cheaper -- and with less regulatory scrutiny -- than a similar purchase of market leader Baidu (Nasdaq: BIDU  ) .  Microsoft might also be wise to pursue foreign growth, especially if it wants to hold onto shareholders discontented with its stateside doldrums.

So why won't this deal happen?

• Outright acquisitions in China by American companies have been tricky. Just ask Coca-Cola (NYSE: KO  ) .
• When Microsoft made its move on Yahoo! (Nasdaq: YHOO  ) last year, there were already rumblings in China that Microsoft probably couldn't seal the deal without divesting Yahoo!'s roughly 40% stake in Alibaba.
• A foreign-owned SINA would likely test the loyalty of its Chinese advertisers. In short, SINA would be worth less.

If there is any merit to the chatter, the deal may simply involve Microsoft snapping up a 10% to 20% slice of SINA. That would let Mr. Softy get his foot in the door, without disrupting the marketplace.

Either way, I guess it's a slow Tuesday if this is the kind of buyout chatter making the rounds today.