After having snubbed Microsoft's initial takeover proposal, reports have indicated that Yahoo is still counting on the software giant to mount another acquisition bid, should its attempts to play the field backfire.
Microsoft's CFO Chris Liddell told attendees at Morgan Stanley's Technology Conference this week that Yahoo had not formally responded to its buyout bid and the company was keeping an eye out for other acquisitions.
Yahoo's board of directors voted on the same day to amend the company's bylaws, in a move designed to delay a hostile proxy fight with Microsoft and extend the time it has to examine offers from other bidders including News Corp and Time Warner.
"Microsoft's management will choose how to respond to this in the next few days and update the board on how to proceed," said a source familiar with the talks, noting that the software giant's stance to date has been a desire to do a friendly transaction.
Despite Yahoo's decision to delay the deadline for shareholders to submit a list of opposition director candidates, the source told ZDNet.com.au sister site CNET News.com that Microsoft already had a shortlist of potential board members drawn from a variety of backgrounds.
According to Stephen Jenkins, a director with Delaware law firm Ashby & Geddes, Yahoo's motion to extend the deadline with Microsoft is a "smart move".
"Although Microsoft needs to get its nominees together and will have 10-days notice to get its nominations into Yahoo, that buys Yahoo more time without the pressure of Microsoft's nominees being made public," Jenkins said. "This potentially signals to Microsoft that it is open to private discussions."
A report in The Wall Street Journal yesterday confirmed that Yahoo has also been in talks with Time Warner. The report indicated that under a possible deal, Yahoo would acquire Time Warner's AOL in exchange for the media conglomerate taking a large minority stake in the combined company, according to unidentified sources familiar with the matter.
The search company and News Corp have also been in discussions about another possible deal which would see News Corp sell Yahoo its monolith social network, MySpace, in return for a stake in the merged Yahoo MySpace venture.