Search Biz: Icahn-Microsoft Cuddle Up, Yahoo Discussing AOL Deal, Google Coming Down To Earth?

There’s that moment in almost any thriller, action, or horror film when you’re supposed to think everything is resolved, but the bad guy, monster, or adversarial force makes a final appearance, startling the hero and the audience. I’m not implying anything about any of the involved parties in particular, but it appears we’re in that moment of the MicroHoo drama.

This morning, after talking with Yahoo insurgent shareholder Carl Icahn, Microsoft issued a statement that, while it was “premature” to discuss specifics, the company would certainly be open to discussions with a new Yahoo board about a partial or complete acquisition:

We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company.

And from Icahn’s statement (issued today):

Microsoft perceives this risk may be quite high with the current board and management in place. However, Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company. He stated that Microsoft would be willing to enter into discussion immediately if the new board that has been nominated were elected.

Both Microsoft and Icahn appear to be saying to the institutional shareholders (wink, wink) the old (now withdrawn) deal is practically a done deal if the Icahn directors are elected.

For its part, Yahoo appears to be trying to negotiate some sort of deal with TimeWarner around a “merger” with AOL as a way to prevent the Icahn insurgency from succeeding. Fortune’s David Kirkpatrick has written an article that argues Microsoft will ultimately succeed in its effort to claim some or all of Yahoo.

Another high-stakes Yahoo earnings report (Q2) is slated for July 22, before the even higher-stakes August 1 shareholder meeting. The Google-Yahoo paid search deal is not regarded as significant enough to mollify disgruntled investors.

Google has some disgruntled employees on its hands after a plan to raise onsite child-care rates became known. The NY Times has a story from this past weekend that uses the child care flap as a doorway into a “Google’s just a regular company after all” kind of critique. And Greg Linden reviews what happened to Amazon’s image in the last recession and predicts Google and its image will be deflated somewhat in this one.

But another piece in the NY Times (“Google, Zen Master of the Market”) lauds Google and its competitive advantages, favorably comparing it to Microsoft and discussing the lessons it has learned from Microsoft’s anti-trust travails.

As Google matures and becomes more like a conventional corporation in some respects, the company is starting to see losses among its ranks. The Inquisitr reports that Feedburner’s CFO Charley Cassell is the latest to depart, leaving for mobile marketing company Vibes.

Finally, Microsoft apparently has launched “secret search” in Australia. A mixture of the Live Search Club and Cashback, users win prizes as a quid pro quo for using Live Search.

Postscript: Yahoo issued a somewhat testy statement in response to Microsoft and Carl Icahn’s statements:

Yahoo!’s Board of Directors continues to stand ready to enter into negotiations with Microsoft Corporation for an acquisition of Yahoo!. Indeed, as recently as June, Yahoo!’s independent directors and management approached Steve Ballmer about just such a transaction, only to be told that Microsoft was no longer interested even in the price range which they had previously proposed. 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.

(emphasis added).

I’m not familiar enough with securities law to know if the Microsoft-Icahn “conversations” cross a line. But the Yahoo remarks above imply collusion on some level, notwithstanding the public disclosure of the discussions.