Yahoo founder and chief executive Jerry Yang accused Microsoft of trying to destabilize Yahoo with no genuine intent to buy the company, the Wall Street Journal reported Wednesday.

Yang, on the defensive as billionaire corporate raider Carl Icahn seeks to unseat the current Yahoo board and install his own people in order to propel Yahoo into Microsoft’s hands, told the Journal that Microsoft has not pursued talks with the company in earnest.

He noted in an interview with the newspaper that Microsoft has recently expressed interest in opening new negotiations to buy Yahoo’s search engine business if Icahn’s proxy fight succeeds.

“To trust Mr. Icahn and his board is really a bad choice,” Yang told the Journal.

“I think that the destabilizing by Microsoft has become more and more intentional. I am not happy about it.”

On Monday Yahoo’s stock price jumped nearly 12 percent after Microsoft said it is willing to reopen talks on a “major transaction” with Yahoo if its board undergoes a major shakeup.

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Analysts believe it’s “possible” that the software giant Microsoft could acquire an equity stake in eBay’s PayPal and Skype. So are we talking about minority stakes or total ownership? Is eBay even up for the sale?

No matter how you slice it, Microsoft has a lot to gain if eBay is willing to sell off any of its moving parts.

We can’t argue against the notion that Microsoft could swallow eBay whole. This was suggested as much three months ago. Such a move would make sense, especially since PayPal and Skype are good fits in Microsoft’s online strategy.

Microsoft once had dreams of taking on PayPal. It was hoping to transform its Passport platform into a transactional medium for third parties.

PayPal was too big to compete against back then, and it’s even bigger now. The only real threat to PayPal these days is Google Checkout, and not even that race is close. If Microsoft wanted to buy Yahoo! so badly, imagine how much it would love to own the micropayments standard that’s trouncing Google, which itself is smacking Yahoo! around these days.

Skype is another good fit. The leader in online chat dovetails nicely with Microsoft’s Web-based communications efforts through Windows Live Messenger.

Then we have eBay itself. Microsoft is no stranger to the leading consumer-to-consumer auction-listings website. eBay is part of the program, through which Microsoft rewards buyers with rebates.

Perhaps the most important aspect eBay can offer in Microsoft’s quest to take on Google is that eBay’s website traffic consists of consumers with a predisposition to spend money online. And Microsoft needs quality traffic, not simply the sheer volume of poorly monetized pages it would have gotten on a Yahoo! deal.

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Billionaire investor Carl Icahn reportedly has decided to lead a mutiny against Yahoo Inc.’s board in an attempt to pressure the directors into reviving negotiations to sell Yahoo to Microsoft Corp.

To turn up the heat on Yahoo’s board, Icahn has lined up a slate of 10 directors to nominate as replacements, The Wall Street Journal reported on its Web site Wednesday, citing an unnamed person close to the matter.

Icahn hadn’t returned phone messages from The Associated Press as of late Wednesday. His intentions should become clear soon, however, because Yahoo has set a Thursday deadline for submitting candidates to oppose its board at the company’s July 3 annual meeting.

A representative of Sunnyvale-based Yahoo declined to comment.

Yahoo’s board is on the hot seat for rejecting Microsoft’s initial bid of $44.6 billion, or $31 per share, and taking measures that finally drove away the software maker.

Microsoft Chief Executive Steve Ballmer orally offered to raise the offer to $47.5 billion, or $33 per share, earlier this month. He withdrew the bid May 3 after Yahoo CEO Jerry Yang, acting on behalf of the board, held out for $37 per share — a price that Yahoo’s stock hasn’t reached in more than two years.
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Microsoft Corporation will focus on growing its own advertising and Internet search business after it withdrew its takeover offer for Yahoo, chairman Bill Gates said yesterday.

Microsoft has not presented an alternative strategy to compete with its dominant rival in the Internet business, Google, since withdrawing a $47.5 billion bid for Yahoo last weekend.

Analysts have been left wondering how the world’s largest software maker will increase its share of that multibillion dollar market without a major tie-up.

“We have always felt we could do very well on our own and now that’s the path we are focused on,” Gates said.

“The standard strategy for us is to just hire great engineers and surprise people at how well we can compete, even with a company that’s got a strong lead,” he said.

Gates says Microsoft remained open to making acquisitions, but declined to comment on possible candidates, such as networking sites like Facebook in which Microsoft already holds a 1.6 per cent stake. “You never know if there’s going to be a deal that makes sense,” he said.

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A chronology of events leading to Microsoft Corp.’s decision to abandon its offer for Web search and advertising competitor Yahoo Inc.:

Feb. 1, 2008: After two years of talks and speculation, Microsoft makes unsolicited offer to buy Yahoo for $31 per share, or $44.6 billion.

Feb 3: Google Inc.’s top lawyer says the buyout could hurt Web innovation.

Feb. 4: Yahoo CEO Jerry Yang tells employees that selling to Microsoft is an option.

Feb. 11: Yahoo rejects Microsoft’s offer, saying it “substantially undervalues” the company’s brand and worldwide assets.

Feb. 19: Microsoft Chairman Bill Gates tells The Associated Press the software maker isn’t in talks with Yahoo about raising its offer. Yahoo releases details of severance plans that would take effect after a buyout, which could make the deal more expensive for Microsoft.

March 5: Yahoo extends a deadline for nominating candidates to its board, buying time to strike an alternative deal. Yahoo is said to be in talks with Google Inc., News Corp.’s and Time Warner Inc.’s AOL.

March 10: Senior executives meet near Yahoo’s Sunnyvale, Calif., headquarters.

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