Yahoo was once one of the biggest internet companies on the planet, but has fallen on hard times in the last few years after Google exploded onto the search market and rapidly replaced Yahoo as the search engine of choice for many users.

Adding to Yahoo's woes were the long and drawn out talks between it and Microsoft that ultimately ended in the resignation of Jerry Yang and significant layoffs of Yahoo staff. Yahoo is now looking at expanding its services into the popular social networking realm and is eyeing acquisitions despite it shaky footing in the market.

Reuters reports that Yahoo is looking to purchase companies that will help it to become a player in the social networking industry and help it to revamp its family of products. Yahoo's CTO Ari Balogh told Reuters, "It's a good time to be buying now."

Balogh decline to specify the names of any companies that Yahoo was considering purchasing, but he would say that the country's number two search engine has had conversations with companies about partnerships and other possibilities. One of the possibilities mentioned is building out the Yahoo platform and basic computing in addition to search.

Balogh said, "I can guarantee you there will be some acquisitions, and we will do some stuff in-house."

Yahoo admits that Google has won the current search game, but believes that the future of search is more than "10 blue links." Balogh continued, "The thing I will tell you is that, core to great experiences for people online may not necessarily be this version of search. I believe search is going to be far richer ... there's a whole other round or two to go in the search game and that's where we intend on playing."

Yahoo's profits are down, as are most search companies in the current economy. Yahoo earned $118 million in the first quarter of 2009, a drop of 13% year over year with sales totaling $1.58 billion. Balogh also said that Yahoo would be releasing a fantasy sports application for the iPhone this year and Yahoo will be introducing features that tie a user's personal setting and preferences for Yahoo together between a PC and their phone.

Balogh told Reuters, "For how many incredible applications we could have and should have, for all the experience on Yahoo, we are terribly under-represented."

Yahoo feels that its high number of users gives it an edge in social networking and that it can swiftly launch and build out a social networking backbone with "tuck-ins" of interesting products that are being developed by other firms.

Balogh said, "We're getting the pulse of companies you might not know about as well as interacting much more aggressively with companies you do."

Many still believe that a search deal between Microsoft and Yahoo could happen. Steve Ballmer has stated that a deal is still possible and Balogh points out that any search deals would have to be approved by the Yahoo board.