Today, billionaire investor Carl Icahn sent a letter to the Yahoo! Board of Directors, announcing his intentions to force Yahoo! to work out a deal with Microsoft. He announced a slate of candidates who will be up for election at the annual meeting on July 3, and an aggressive plan to acquire enough stock to make sure they would be elected (and then to force a sale to Microsoft). In the letter, Icahn pulled no punches about his intentions:

It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer.

After Microsoft walked away from the deal, Yahoo! stock slid, but not nearly as far as the pre-offer price of $19.18. Clearly Yahoo! investors weren’t ready to walk away. First there were rumblings from large investors about ousting Jerry Yang, and now Icahn has stepped in. While some have said that the Microsoft pull-out was a ploy, there were clear indications that Ballmer had soured on the whole idea, and that the damaged goods Yang was offering was not what Microsoft was looking for.

Microsoft made a $44.6 billion offer to buy Yahoo! on February 1, 2008, and since then we've been waiting to see what happens next.  While nothing officially has been announced, there is speculation that the deal may be nearing its next phase.  Yahoo! hasn't come up with a miracle deal to save the company, and can only stall so long.  Yahoo! has already delayed the voting for a new Board of Directors, but Microsoft "reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal", and according at least to TechCrunch, is ready to take over the Board if it should become necessary.

However, beating Yahoo! up to perhaps get a better price, or dragging them through the mud with an acrimonious proxy takeover, really does Microsoft no good.  Microsoft wants the Yahoo! brand intact, has big plans for it in fact, and a bitter fight over the acquisition will not serve Microsoft well.  Rumors are swirling that Microsoft and Yahoo! are talking, and that some kind of a deal will be announced fairly soon.  While Microsoft really has no reason to up the price, as there are no better offers, expect some sort of rearrangement of the numbers to make Yahoo! save some face, which of course in the end is a good thing for the brand, and as such for Microsoft.  Clarification of ownership issues regarding Alibaba, which is not very interested in being owned by Microsoft, may further change the numbers.  And even if Microsoft just straight out ups the price, that may be seen as confirmation of Yahoo!'s worth, a good thing once Microsoft takes possession.

So let's say Yahoo! ends the stalling and comes to the table.  Lots of questions will still have to be answered.  Here's a list of five: