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Yang to Ballmer: May your first child be a masculine child

Sources say that Yahoo's CEO is working out details of a plan he intends to submit to investors if Microsoft attempts to enlist shareholder support for a buyout.

Jerry Yang, still scrambling to find a last-minute suitor to avoid becoming Steve Ballmer's vassal, is said to be girding for the certainty of a coming proxy war with Microsoft.

Sources familiar with the brain trust's thinking say that Yahoo's CEO is working out details of a plan he intends to submit to investors if Microsoft attempts to enlist shareholder support for a buyout. Microsoft has roughly three weeks before announcing its opposition slate to Yahoo's board of directors.

Wanna be Bill Gates' new buddy?

In the meantime, one well-informed source described to me:

"Yang is personally committed to keeping the company out of Microsoft's hands. Come what may--it doesn't matter financially to him. Money is irrelevant...just as long as he can make a reasonable claim to (Yahoo) shareholders."

Ah, there's the rub. Yang is a dot-com millionaire and the periodic pops and drops in Yahoo's share price are not as much of a concern as they are, say, to the big funds and individual investors who own the company's stock. Not that he's oblivious to what goes on in the market, but that's not his No. 1 priority. Remember this quote from a former Yahoo employee who knows Yang.

"Jerry would rather give up his left pinky than see Microsoft wind up running this company."

Maybe one sign of his desperation explains the recurring rumor being pushed on TechCrunch about News Corp. taking an equity position while spinning off some of its properties into Yahoo.

Covering this business, I've learned never to say never, but Rupert Murdoch's too smart to hitch his company's future to the dead weight that Yahoo would bring to this deal. The man's got more pressing matters to consider, such as News Corp.'s mega-acquisition of Dow Jones. There's not enough potential upside benefit to risk more manpower and money just to let Yang keep Yahoo as his personal toy.

Out of all the rumors and half-true reports to date, the one I like best was floated earlier this month on Silicon Alley Insider. To wit:

Microsoft and Yahoo combine their Internet forces and assets in a standalone company called Yahoo.

Microsoft will trade its Internet division and $10 billion to $15 billion in cash for 51 percent of the combined company's stock (resulting in an overall valuation similar to Microsoft's $45 billion offer). Fifty-fifty would make sense, but Steve won't agree unless he has control, and Steve holds more cards.

Microsoft will control a majority of the board.

The new board will immediately decide on the combined company's management team, and that team will immediately take control of the company. Not in early 2009. Now.

Steve (Ballmer) will be chairman of both boards.

An altogether creative and possibly workable plan. Too bad it won't see the light of day--not as long as Jerry Yang likens an offer from Microsoft to a date with Luca Brasi.