In explaining Carl Icahn's raid on Yahoo, pundits bring up his efforts to shake up tech and media giants like Motorola and Time Warner. But I think there's a better analogy in Icahn's past: TWA. Icahn's attempt to gain a board seat or broker a new deal to sell Yahoo to Microsoft will not send Yahoo soaring; if left unchecked, he will run Yahoo into the ground as surely as he did that troubled airline. Icahn's bid, and the support it is drawing from large Yahoo investors, seems premised on the notion that he can bring Microsoft and Yahoo back to the bargaining table. That seems unlikely.

Sending angry letters, going public with a hostile offer — Microsoft CEO Steve Ballmer played rough with Yahoo CEO Jerry Yang and the Yahoo board during merger negotiations. Yahoo shareholders, dispirited by the failure of those negotiations, want corporate raider Carl Icahn to play rougher. Icahn purchased $1.3 billion worth of Yahoo only after large Yahoo shareholders contacted him and urged him to become involved, a source familiar with the matter told the Wall Street Journal. The man controlling the second largest portion of Yahoo shares, portfolio manager Bill Miller of Legg Mason, told the Journal he's glad Icahn joined the fray. "To the extent he can get the parties back to the table I'd be all in favor of that," Miller said. (Photo by AP/Mark Lennihan)

Yahoo might merge with Microsoft whether the CEOs of either company like it or not. Since the merger fell apart last week, corporate raider Carl Icahn has purchased as many as 50 million shares in the company and now he's "leaning toward launching a proxy contest in an effort to push Yahoo back to the negotiating table," a person familiar with the matter told the Wall Street Journal. Microsoft sources say they have not given Icahn assurance that the company will purchase Yahoo, even at a more favorable price. In 2007, Icahn purchased 8.5 percent of BEA Systems, not long before the company first rejected and then agreed to a merger with Oracle.

Yahoo shareholders have asked Microsoft's former nominees for the Yahoo board to consider joining a new alternative slate for Yahoo's annual shareholder meeting on July 3. But Thursday's nomination deadline makes it unlikely that CEO Jerry Yang and the board will face a proxy fight for control over the company. Instead, Yang and his fellow directors are likely to get new lawsuits — in addition to the 10 already filed. Angry shareholders "should contact us. We are trying to represent them," Mark Lebovitch, a partner at law firm Bernstein Litowitz Berger & Grossmann LLP, told the Sydney Morning Herald. "If there are large shareholders who want to express to the board the view that they failed in their duties, we are the people to call." Gee, what's wrong with email?

Microsoft's in-game advertising executive Carol Koh Evans has left the company, rejoining wedding-planning site The Knot as its COO. Prior to Microsoft, Evans led The Knot through its IPO in 1999 as the company's head of corporate development. Evans is the second major media executive to bolt Microsoft this year. She follows Joanne Bradford, who left the company to join Los Angeles-based ad agency Spot Runner in March. Evans's departure is another blow to Microsoft's plan to grow its online business internally — "organically" as part of "Project Granola," as the company calls it — following the company's failed bid to acquire Yahoo.

Jeff Raikes, a Microsoft employee since 1981 and current head of the Office Business Division, will be replacing Patty Stonesifer as the CEO of the $37.3 billion Bill and Melinda Gates Foundation. Raikes has been close to the First Couple at Microsoft for some time, and has some nonprofit experience through a trusteeship at the University of Nebraska. A sports fan who takes his daughter to University of Washington women's basketball games, Raikes is also part-owner of the Seattle Mariners baseball club. In the announcement, the foundation said it will be doubling the employment rolls. Look for more senior "softies" to move to the charitable organization as a pre-retirement change of pace. But the question remains why the foundation can't, or won't, hire more experience non-profit veterans to manage the fund.(Photo by Steve Jurvetson)

Technologists are instinctively averse to debt. The cycles are too swift and mistakes too punishing, the conventional wisdom says, to subject a startup to the burden of debt; cash is better spent on growth opportunities than interest. But Facebook has never followed the usual script for a startup, and its CFO, Gideon Yu, is no herd-follower, either. No wonder that the news that Facebook is leasing $100 million worth of servers, after raising a $360 million round of venture capital from Microsoft and Li Ka-Shing, is causing such a ruckus — and some misconceptions. Here are the instant myths that have arisen:

He made his fortune — about $18 billion worth — "fundamentally altering the course of human existence." His patron saints are Microsoft cofounder Paul Allen and Apple cofounder Steve Jobs. And like his fellow geek, "the Nerdling," he's featured in Christopher Tennant's Official Filthy Rich Handbook, deliverable in June. An excerpt, below.

Yahoo shares are hovering around $25 because investors hope major Yahoo shareholders can still force a deal with Microsoft at $33 per share or more. But at Google's annual shareholder meeting yesterday, cofounder Sergey Brin and CEO Eric Schmidt tried their best to destroy those hopes, amping up talk of a deal that would outsource Yahoo's search advertising to Google and make Yahoo unattractive to Microsoft. Brin said the deal is designed to keep Microsoft at bay. "[Yahoo was] under a hostile attack and we wanted to make sure they had as many options as possible," Brin said.

Microsoft's chief strategy officer Craig Munde told reporters yesterday that the Yahoo merger is off for good — he "assumed", before putting the ball back in Yahoo's court:

In a letter from software giant Microsoft's lawyers at Sullivan & Cromwell to proxy board members, the company rescinded the agreements it had struck in case of a hostile take-over bid for Web search pioneer Yahoo. But hey, with Yahoo CEO Jerry Yang now begging for deal with tail tucked and head down, the companies may still agree to a friendly take-over bid. [WSJ]

We've toured the top 10 workspaces in tech. Click to viewNow, we've gone back to Office Snapshots to find the 10 worst. What makes them so bad? Some offend with exposed fluorescent lights, gray cubicles and a dystopian corporate sheen. But others, with their pseudo-hip graffiti, kindergarten toys and plastic decorations — all in a desperate attempt to seem "Internet-y" — come off even worse. We'll start with Yahoo's New York digs.

After more than a decade of trans-Atlantic antitrust scrutiny, one would think Microsoft would be, oh, I don't know, subtle about its ambitions to destroy a competitor. Someone in Microsoft's European HR offices didn't get the message. A poster advertising jobs at Microsoft Europe lists, among other qualities it's looking for in candidates, the ability to be a "Google killer."

Yahoo's stock has stayed well above its premerger level of $19, suggesting that its post-Microsoft-bid performance isn't just a matter of shorts covering their positions. Perhaps ever-optimistic Wall Street arbitrageurs believe Steve Ballmer will come back with another offer. Or perhaps buy-and-hold types believe Yahoo will outsource search advertising to Google, increasing its cash flow by $1 billion. Well, bad news, Yahoo shareholders. Ballmer and Microsoft have moved on, to Facebook and other prospects. And Google? With Microsoft out of the picture, its executives are suddenly, conveniently worried about what a search deal would look like to Washington regulators.

If buying Facebook doesn't work out, Microsoft plans to compete on the Web by growing "organically." Bill Gates said that means search advancements, more marketing and lots of meetings. Lots of meetings. But here's what those meetings ought to be about: unifying Microsoft's online branding. Check out the screenshots of Microsoft's Web designs below. Nabbed by LiveSide, ReadWriteWeb's Josh Catone points out they contain "four different search boxes, two different Live.com "orb" logos (in four different sizes), and six different header backgrounds."

Microsoft

Microsoft's world headquarters in Redmond, Washington go the other way. Welcome to the Borg cube. No talking. (Photos by taguri and ilikeyesterday)

How badly does News Corp. want to move MySpace out the door? During yesterday's quarterly earnings call with analysts, News Corp. president and COO Pete Chernin and chairman Rupert Murdoch said they haven't discussed a merging properties with Microsoft, AOL or Yahoo in quite some time. Like maybe 14 days. Chernin: "I have not had a conversation with Microsoft or AOL in a couple of weeks." Rupert Murdoch "Nor have I." Silicon Alley Insider doesn't believe the disclaimers, reminding us that at the end of the last quarter, Murdoch denied interest in Yahoo even as he'd ordered a team to make the deal happen.

Intellectual property is, in many ways, my family's business. And over the years my mother Mary Deaton and I have had more than a few heated arguments about copyright reform. That said, my mom has been using Microsoft Windows since before Facebook CEO Mark Zuckerberg shed his diapers, and was ripping CDs to MP3 since I bought her a Rio MP3 player for Christmas with my dot-boom winnings. Since then, she bought into the system and signed up with MTV's now defunct Urge digital music service. But thanks to digital rights management, or DRM, RealNetworks CEO Rob Glaser is punishing her for such law-abiding ways — and charging her $14.99 a month for these "feature." Seems that in being migrated, like other Urge users, to Real's Rhapsody service, my mom lost the ability to transfer her music to her MP3 player or burn it to CD as promised. What ensued is a case study in bad customer service and the consumer-punishing idiocy that is DRM, and it's all after the jump.

Part of the deal between NBC and Microsoft to sell television shows to Zune owners is that Microsoft will attempt to build in antipiracy technology that keeps anything you might have downloaded through less than legitimate means off the device. In other words, you can say goodbye to trading MP3 files or videos with your friends on the Zune — instead, you'll have to use officially authorized sources to charge it up with content. How will the Zune know if the video you're trying to download to the device was downloaded illegally or, say, created by you? Until digital watermarking technology improves significantly, it won't, and even then, who knows. So for you lonely Zune owners, prepare to get even lonelier, because the second the company implements this "feature," it can kiss goodbye to what little market share it now enjoys. (Photo by AP/Ted S. Warren)

Sure, Microsoft would buy Facebook, but management knows Zuckerberg's not going to sell — and unlike Yang, he controls his company's board. As for Yahoo, well, "Yahoo can twist," one source told BoomTown. "Microsoft has lots and lots of other options." Redmond's favorite? Granola. Microsoft's internal plans for a post-Yahoo reality are code-named "Project Granola" because the company now wants to grow its online properties "organically," like every hippy's favorite breakfast food. But to us, the name seems utterly fitting in its blandness: Microsoft chairman Bill Gates told the WSJ that Microsoft's big plans include more "advances" in search, more marketing and more meetings in Redmond, Washington. That kind of bureaucratic strategy sounds like management needs a high colonic, not just more dietary fiber. (Photo by Adry Long)