07/15/2008 05:12 am ET Updated May 25, 2011

Microsoft Wants To Deal With New Yahoo Board, Yahoo Doesn't Want A New Board

Carl Icahn's saber just got louder. The Associated Press reports that Microsoft has indicated that it would be interested in negotiating a deal with Yahoo once more if there were a new board of directors. The deal could include Microsoft buying just a portion of Yahoo, such as the search engine, or even buying the whole company if need be -- now likely at a steeply discounted price, after Yahoo's stock plummeted last week.

Microsoft Corp. threw its weight behind investor Carl Icahn's effort to oust Yahoo Inc.'s board next month, saying Monday that a successful rebellion would encourage the software maker to renew its takeover bid for Yahoo or negotiate another multibillion-dollar deal.

The development gives Icahn a huge carrot to dangle before Yahoo shareholders as he wages a campaign to oust Yahoo's nine directors at the company's annual meeting Aug. 1.

Henry Blodget over at Silicon Alley Insider writes that even if the Yahoo board were fired by shareholders -- a big if -- it wouldn't seal a deal for Microsoft to buy Yahoo.

Or, importantly, Microsoft might NOT buy the company. Don't forget that Microsoft has already made one search deal with large guarantees that Yahoo was wise enough to reject. No guarantee that the next one will be that much better.

Later, Yahoo's board shot back at Icahn and Microsoft in a press release, saying that if Microsoft is so eager to buy Yahoo, it ought to tender a new offer. From the release:

Yahoo!'s Board of Directors continues to stand ready to enter into negotiations with Microsoft Corporation for an acquisition of Yahoo!... Now Mr. Ballmer and Mr. Icahn have teamed up in an apparent effort to force Yahoo! into selling to Microsoft its Search business at a price to be determined in a future "negotiation" between Mr. Icahn's directors and Microsoft's management.

We feel very strongly that this would not lead to an outcome that would be in the best interests of Yahoo!'s stockholders. If Microsoft and Mr. Ballmer really want to purchase Yahoo!, we again invite them to make a proposal immediately. And if Mr. Icahn has an actual plan for Yahoo! beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it.

Silicon Alley Insider's Blodget sides with Yahoo.

This is our problem with the new Icahn/Microsoft proposal, too. We like the fact that Microsoft is now explictly willing to entertain the possibility of buying the company again, but we already took that as a given. Now we want specifics. Namely, how much?

And if Microsoft is going to give those specifics to a new board, we're rather they just gave them to us, so we can decide in advance whether we should fire the current crew. As we explain here, we're not going to fire the current board just to have Microsoft say, "Our final offer is...$22 in cash."