SAN FRANCISCO — A large Yahoo Inc. shareholder has joined a growing chorus urging the beleaguered Internet company to set aside its past differences with Microsoft Corp. and renew negotiations to sell its search operations to the spurned suitor.

In a letter sent yesterday to Yahoo's board, Ivory Investment Management called upon the directors to make amends for "acting unreasonably" in their earlier talks with Microsoft by quickly closing a deal with the software maker now.

Ivory Investment, which owns a 1.5 percent stake in Yahoo, reasoned the Sunnyvale, Calif.-based company could persuade Microsoft to pay $15 billion for its search operations and still emerge with more earning power than it currently has.

The net result: Yahoo could nearly double its current stock price to at least $24, based on the financial assumptions made in Ivory's analysis.

Some of Ivory's math is debatable, but there is little doubt left on Wall Street that a search deal with Microsoft now appears to be Yahoo's best bet, said Stanford Group analyst Clayton Moran.

"It's a very reasonable question for Yahoo shareholders be asking right now: why the company isn't talking to Microsoft right now," Moran said. "The pressure should be mounting for them to talk because there is no good explanation for them not to be doing so at this point."

Investors reacted as if Ivory's cajoling will help bring Yahoo and Microsoft back to the bargaining table. Yahoo shares surged $1.21, or 10 percent, to close at $13.40 while Microsoft shares rose 1 cent to $20.61.

Yahoo spokesman Brad Williams declined to comment on Ivory's letter.

Redmond, Wash.-based Microsoft didn't immediately respond to a request for comment, but Chief Executive Steve Ballmer reiterated last week that he remains interested in exploring a search deal with Yahoo as he tries to come up with a way to undercut Google Inc.'s dominance of the online advertising market.

Although it trails Google by a wide margin, Yahoo's search engine is the Internet's second most popular, with a U.S. market share of about 20 percent, according to comScore Inc. Microsoft's search engine ranks third at 8.5 percent.

Ballmer has maintained that Microsoft no longer is willing to buy Yahoo in its entirety — an option that was pulled off the table seven months ago when Ballmer withdrew a takeover offer of $47.5 billion, or $33 per share. Yahoo CEO Jerry Yang was holding out for $37 per share.

Yahoo's board removed a potential obstacle to a Microsoft deal by overhauling an employee severance program that could have left a buyer with a major financial headache after a takeover.

The revisions disclosed yesterday will make it more difficult for workers to qualify for severance payments after a takeover and excludes a sale of the search operations from the program.

With Yahoo's stock in the doldrums, other shareholders besides Ivory Investment already have been lobbying for the company to reconcile with Microsoft.

Yahoo director Carl Icahn, who owns 5.5 percent of the company, has been leading the charge, and others, like Mithras Capital, also have thrown their support behind a Microsoft deal.

Last month, Yang said he is ready to talk if Microsoft wants. He made the comments shortly after Google scrapped a planned advertising partnership that Yang had been counting on to boost annual revenue by $800 million.

Yahoo is searching for a CEO to replace Yang, who co-founded the company 13 years ago.