Microsoft declined to comment Tuesday on its interest in Yahoo.

Yahoo's most outspoken director, Carl Icahn, has been lobbying for a search deal with Microsoft since he became one of the company's largest shareholders in May.

Icahn waged a campaign to fire Yang during the summer before reaching a truce that gave him and two allies seats on Yahoo's board. Those allies, former Viacom Inc. CEO Frank Biondi and former Nextel CEO John Chapple, also could vie for Yang's job.

Even if Icahn finally gets his wish, a Microsoft deal might not be enough to make him whole. He acquired his 5 per cent stake in Yahoo for around $25 a share.

Sanford Bernstein & Co. analyst Jeffrey Lindsay doubts Microsoft will renew its pursuit of Yahoo until early next year. He reasons Microsoft has little to lose by waiting, since Yahoo's stock is unlikely to rise much higher, and the extra time will give the software maker more time to assess how its own efforts to improve its Internet operations are panning out.

Waiting also would help Microsoft get a better understanding of the antitrust hurdles a Yahoo bid might face under a new presidential administration.