Waiting on the wild man on Yahoo's board

After watching the demise of U.S. capitalism in the last couple of weeks, nothing shocks me any more. So I'm the last person to dismiss the veracity of M&A rumors one might ordinarily classify in the "No way, Jose" category.

So it is that the latest buzz centers on a post from Matt Marshall at VentureBeat, who reports renewed rumblings of a Microsoft-Yahoo marriage--but this time with a twist: the deal would follow Yahoo's acquisition of AOL.

But here's why it makes sense. Increasingly, word is that Google is going to have trouble upholding its advertising deal with Yahoo, because antitrust regulators are concerned about the market dominance the deal gives to Google and there's a very strong chance they'll reject it...That would make Yahoo even more desperate to do a deal with another company.

As a dear college professor of mine used to say, yes, but. Yes, Yahoo conceivably would want to do another advertising deal. But would it be that keen on going all the way with Microsoft? I'm not sure there's much ardor on the Yahoo side. After four months of foreplay and no consummation, both sides were left hot and very bothered.

That's not to say they don't still have a yen for each other. A lot's going to depend on how far south the Internet advertising business falls. Earlier today, an analyst with Collins Stewart put out a note arguing that Yahoo's "fundamentals are deteriorating." Yahoo earlier in the week gave the world its first public viewing of the company's new APT ad platform. Jerry Yang and Sue Decker still want to prove the naysayers wrong.

The wild card is the wild man on Yahoo's board. Now that Carl Icahn's on the inside, thanks to his campaign to win board representation, what's to stop him if the Justice Department puts the kibosh on the proposed Yahoo-Google ad arrangement? If the DOJ kills the Google deal, Icahn can go to the mattresses again--this time as a oh so respectable insider.