As Yahoo went around handing out ~1,500 pink slips and culling products and services Wednesday, California hedge fund Ivory Investment Management LP, which owns ~1.5% of Yahoo and probably wishes it didn’t, started pushing the company to do a search deal with Microsoft (like who isn’t?).

Anyway, it released a letter it sent to the Yahoo board suggesting that Yahoo could see $15 billion ($24-$29 a share) if it sold its search operation to Microsoft. And if it made Microsoft its search provider but kept 80% of the revenue generated on its own site, it could be up $500 million a year.

Ivory urged the companies to act now because Google isn't standing still.

Ivory of course is dreaming; $15 billion is close to what all of Yahoo's been worth lately and way more than $5 billion Microsoft offered for Yahoo search last time through - and that was before the global economy fell off an icy ledge into a crevasse.

Thinking backwards to Microsoft's original offer for all of Yahoo, Ivory reckons that that $15 billion would turn to $9 billion after taxes that Yahoo could spend buying back stock and - Eureka! - $30 a share, close to Microsoft's first $31-a-share bid.

Lucky for Ivory, Microsoft CEO Steve Ballmer told the Wall Street Journal last week that Microsoft should move to acquire Yahoo's search business "sooner than later."

He may be waiting for Yahoo to replace CEO Jerry Yang. Ex-Vodafone CEO Arun Sarin (pictured) is the latest candidate to reportedly make the short list.

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