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Yahoo CEO Jerry Yang spent the holiday weekend with his company's Goldman Sachs advisers, devising a plan to present shareholders during the company's annual meeting on August 1. The goal: Craft an alternative to a company breakup or buyout at the hands of Microsoft, which would likely come at the cost of the entire Yahoo board's jobs, including Yang's. To escape such a fate, Yang and his bankers zeroed in on Time Warner, hoping to acquire its online property AOL in exchange for $10 billion worth of Yahoo stock. It's an old plan, brought up again last week after first surfacing in April.

Yahoo employees don't relish a Yahoo-AOL merger, mostly because they and the rest of the Valley view AOL as a relic of the 1990s, still somewhat popular only because old people in flyover country aren't comfortable with change, even if it's just changing their homepages in Internet Explorer for the first time since 1997. We're skeptical Yahoo can close the deal. Cash-rich Microsoft is also said to be considering buying AOL in order to boost its brand-advertising inventory, and Time Warner CEO Jeff Bewkes just wants to offload the embarrassment. Don't expect CEO Steve Ballmer to let Yahoo embarrass him twice.