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Updated at 2:20 p.m. PDT, with details about an opinion piece by Yahoo board member Gary Wilson in The Wall Street Journal.

After taking a one-two punch from investor activist Carl Icahn and Microsoft on Monday, Yahoo CEO Jerry Yang threw a few punches of his own in an interview in The Wall Street Journal on Wednesday.

Jerry Yang

(Credit: Yahoo)

Yang is facing a proxy fight with Icahn, who is seeking to unseat the board and oust the Yahoo co-founder and chief executive from his top-dog position.

In a counter punch, Yang characterized Microsoft as trying to "destabilize" the Internet search pioneer by issuing public support to Icahn and stating its willingness to renew its bid for all of the company, or just its search assets, should a new Yahoo board be put into place after the August 1 annual shareholders meeting.

In his interview with the Journal, Yang said:

I think that I can bring stability back to Yahoo, and I want to get on with building company. I think that the destabilizing by Microsoft has become more and more intentional. I am not happy about it.

Yang noted he has been perplexed by Microsoft's unwillingness to continue negotiations with the company if it wants to do a deal. He reiterated the company's stance that it is willing to look at any deal Microsoft wants to propose.

Microsoft, in its public statement Monday, said it had come to the conclusion the software giant "cannot reach an agreement" with Yahoo. The Internet search pioneer previously rejected Microsoft's sweetened buyout offer of $33 a share and declined its offer of a partial buyout of Yahoo's search business, noting the terms of the partial deal were not adequate.

No formal discussions between the two companies are currently under way, Yang said in the interview.

And Yang said any effort by investors to "trust" Icahn and his proposed investor slate would be "really a bad choice."

Yahoo board member Gary Wilson, meanwhile, offered up his two cents on corporate governance in an opinion piece in The Wall Street Journal on Wednesday. In the op-ed piece, Wilson advocates for keeping the role of CEO and chairman separate, in a move to avoid the "Imperial CEO" syndrome.

While the vast majority of Wilson's op-ed piece is of a general nature on this topic, he does, as one would expect, make reference to Yahoo.

The company's board of directors and Yang are both under extreme pressure by shareholders, of which a number of significant players are calling for their heads.

Wilson, in the op-ed piece, says:

I have also witnessed the benefits of separating the chairman and CEO roles as a director of Yahoo. Despite the mistaken impression left by some media coverage, the Yahoo board of directors is intensely focused on creating value for shareholders--and the separation of the chairman and CEO roles in 2007 has made the present situation involving Microsoft and other alternatives a shareholder-focused process marked by close board oversight of management. I am confident it will result in a good outcome for Yahoo shareholders.

The simple change I suggest to effect the separation of chairman and CEO--requiring that an independent director become chairman when a new CEO is named--would increase the rightful influence of ownership in the governance of American corporations, and lead to extinction of the Imperial CEO. This, in turn, would improve corporate performance and decrease the need for new, expensive and intrusive government regulations to control management excesses.

Hmm, wonder if Icahn will follow such advice should his slate win in its proxy contest...

Yahoo's third largest investor offered up some advice Tuesday to dissident shareholder Carl Icahn on what it may take to swing investor votes his way in a proxy fight, according to a Reuters report.

Legg Mason portfolio manager Bill Miller had this observation to offer to Reuters, when queried on whether he would support Icahn's proxy fight to unseat Yahoo's board of directors at the company's August 1 shareholders meeting:

The difficulty with Icahn is he'd have more shareholder support if he would say he wouldn't sell the company for less than $33.

What is the magic number for Carl Icahn?

(Credit: CNET News)

Earlier this week, Icahn's proxy fight got a boost when Microsoft announced it would be willing to renew its buyout bid for all of Yahoo, or just its search assets, with a "new" Yahoo board.

Icahn and Microsoft, however both stated they were unwilling to discuss the details or price of any transactions that Microsoft may propose to a new board.

Said Icahn in his statement Monday, referring to Microsoft CEO Steve Ballmer:

I hope to continue to be speaking to Steve over the next few weeks; however, since I do not yet represent the Yahoo board, both Steve and I do not wish to get into details over price, or even which of these transactions makes the most sense.

Much has been said about how badly the Yahoo board has "botched up" negotiations with Microsoft over the past months. There is no need to keep pointing out the mistakes I believe Yahoo made by not immediately taking a $33 offer made by Microsoft.

Microsoft withdrew its sweetened unsolicited buyout bid in May, after Yahoo countered with a request for $37 a share, and failed to strike a partial deal for just Yahoo's search business in June.

As Miller calls on Icahn to issue a statement that he would not be willing to sell Yahoo to Microsoft for anything less than $33 a share, the portfolio manager may want to recall similar advice Icahn had given to Yahoo in early June.

Icahn, in a letter to Yahoo chairman Roy Bostock, had stated:

In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis. So why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?

But, of course, that was a different time, a different era, in the five-month saga between Yahoo can Microsoft. That was a time when Microsoft was still willing to negotiate with Yahoo.

Now, as Microsoft said Monday in its statement of support for Icahn's proxy contest:

We have concluded that we cannot reach an agreement with them. We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo such as either a transaction to purchase the "Search" function with large financial guarantees or, in the alternative, purchasing the whole company.

Shares of Yahoo were down slightly in morning trading, nearly off 1 percent at $24.44 a share.

Tuesday brought a mixed bag of Microsoft news. On the Daily Debrief, I sit down with CNET News senior writer Ina Fried to discuss the good, the bad, and the downright embarrassing.

Let's start with the good. The company announced the pricing of the new, pay-as-you-go business apps for the Web. The whole suite of business tools, which includes a variety of office communication tools, will run you $15 a month. Individually, the apps will go for $3 a pop. Ina suspects these tools will be very handy for professionals on the go or for companies who choose not to employ IT support.

The bad and embarrassing news is all wrapped into one. On Tuesday, the company launched the Vista Compatibility Center. Yes, you read that right. We're still talking about Vista, the operating system that Microsoft released 18 months ago. The need for the Center speaks volumes about consumers' slow adoption of the OS. Ina makes the point that if this were Apple, the company would have already moved on to a new cat. Oh, and to add insult to injury, the online Center was down and unavailable for most of the morning.

Microsoft detailed on Tuesday its road map and pricing for Web-based software suites built for big companies and growing businesses.

Enabling telecommuting, which many employers and workers increasingly favor, is likely to be a selling point for the productivity and "deskless worker" tools within the Microsoft Online Services lineup.

The move is part of Redmond's push to integrate online and desktop software, shifting much of the heavy lifting to the "cloud."

"Microsoft Online Services is a key component of the software plus services initiative, and we're seeing customers, partners and even competitors embrace this flexible approach to the cloud," Stephen Elop, president of the Microsoft Business Division, said in a statement.

Details were unveiled Tuesday in Houston at the Microsoft Worldwide Partner Conference.

Microsoft's per-user monthly fees for its online business services.

(Credit: Microsoft)

For $15 per month per person, the business productivity suite offers an Outlook-integrated Exchange Online for e-mail and calendars, Office SharePoint Online collaboration, messaging via Office Communications Online, and Office Live Meeting video-enabled Web conferencing.

The software giant will charge another $3 per month per user for the Deskless Worker Suite, which combines flavors of SharePoint Online and Exchange Online. The SharePoint portal offers access to internal company sites and search. E-mail, calendars, security filters, and Outlook Web Access Light are included with Exchange Online Deskless Worker.

Microsoft aims to simplify otherwise complex corporate tasks managed by engineers or IT technicians. For instance, a WYSIWYG interface would enable an IT worker to give a new employee access to the company tools in a series of steps that could be shorter than setting up, say, a free Hotmail or Yahoo e-mail account.

One can sign up online to try the beta services.

Exchange Online and Office SharePoint Online remain in beta, with final availability set for sometime in the second half of 2008, when Office Communications Online beta is also due. Microsoft plans for international availability in 2009.

The company offers to pay resellers of its Online Services 12 percent of the price of each contract secured during the first year, and 6 percent per subscription year thereafter. Interested companies can learn more at Microsoft's QuickStart Web site.

Microsoft partners and resellers of Online Services include Accenture, CDW, and Unisys. Nokia is among the companies using the online tools for messaging and collaboration.

Microsoft Online Services includes these tools.

(Credit: Microsoft)

Investor activist Carl Icahn needed a sign, a tangible sign, that Microsoft was still interested in buying Yahoo, or at a minimum, its search business, if he were to increase his chances of winning his proxy fight to unseat the company's entire board of directors.

On Monday, in a coordinated effort, Microsoft delivered that sign. The software giant issued a public statement that it was not only willing to discuss a potential buyout of Yahoo's search business, but also, alternatively, a renewed bid for the entire company--providing a "new" board was elected at Yahoo's August 1 shareholders meeting.

Despite this significant turn of events, Icahn has yet to pull the trigger and announce whether he will ultimately run a full slate of dissident directors against Yahoo's nine-member board to take control of the company, or only put forth a partial slate to go for less than a majority of the seats on the board. Until Icahn files his definitive proxy, he isn't able to distribute proxy cards asking Yahoo investors to vote for his nominees, or to hit the investor road show circuit touting his candidates.

Although there could be a variety of reasons why Icahn has not yet filed his definitive proxy, ranging from addressing any last-minute changes requested by the Securities and Exchange Commission to unexpected delays over Fourth of July weekend, it could provide the investor activist with an additional bargaining chip in achieving a friendly Yahoo-Microsoft deal before he finalizes his proxy plans.

To increase its chances of later entering into a Yahoo transaction, Microsoft needs Icahn to successfully run a full slate. And to bolster his chances of unseating Yahoo's current board, Icahn needed Microsoft to publicly state it is still interested in buying Yahoo.

But Icahn, an experienced fighter on the proxy front, is aware he can also lose and may wish to leverage his potential bargaining chip to push the parties to narrow the gap on a transaction that both can live with. Last month, Icahn lost his bid for three out of four seats on Biogen Idec's board.

In the Yahoo-Icahn proxy fight, the longer Icahn waits to file his definitive proxy, the less time he'll have to circulate the materials among Yahoo investors before the August 1 annual shareholders meeting.

"The longer he waits, he'll lose on getting votes to retail (mom-and-pop) investors," said one proxy solicitor. "But it may not hurt him if he's concentrating on only large institutional investors. They tend to wait one or two days to vote before a meeting anyway."

Institutional investors include mutual funds, pension funds, and asset management firms.

These large investors, specifically pension funds and index funds, often rely on institutional investor advisory firms for recommendations on how to vote on proxy matters. As a result, these advisory firms can wield a lot of influence in proxy contests and typically give their recommendations to their clients a week or two before an annual shareholders meeting.

One source with an institutional investor advisory firm said Icahn still faces a challenge in winning a recommendation from advisory firms, despite Microsoft publicly stating it would work with a "new" Yahoo board and would be interested in discussing a potential deal.

"We would base our recommendation on how the board has performed and what value it has brought to shareholders," said the institutional investor advisory source. "Sure, we'll pay attention to Microsoft's statement it's willing to work with a new board, but that won't be our main consideration."

But institutional advisory firms may, or may not, have as much of an effect in Icahn's proxy fight.

"Shares of Yahoo are now trading in the hands of fast money," said the proxy solicitor, noting that arbitragers don't rely on institutional investor advisory firms for advice.

Ever since Microsoft first stated its intention to purchase Yahoo in February, and Yahoo said no, it's been a roller coaster as the deal goes through its on-again, off-again phases. On Monday's edition of the Daily Debrief, I sat down with reporter Dawn Kawamoto to get the scoop on the latest news that Microsoft might again be interested in acquiring the company, or perhaps just the search portion.

In a one-two punch type of delivery system, investor Carl Icahn and Microsoft appear to have teamed up to oust Yahoo's board. Kawamoto explains why this technique may be the most effective of all and why it could have broad appeal to shareholders. While Icahn has unveiled this portion of his plan, he has yet to name the members of the dissident slate. I hope everyone is still hanging on tight as our coaster has yet another hill to climb with the end of the ride nowhere in sight.

Microsoft issued a security advisory on Monday warning about targeted attacks being launched that exploit a hole in the ActiveX control for the Snapshot Viewer in the Microsoft Access database management system.

Basically, an attacker would have to lure a victim, via a link in an e-mail or IM for instance, to a specially crafted Web page that could exploit the security hole to allow remote code execution. This would provide the attacker with as much access to and rights on the computer as the logged-in user has.

The vulnerability only affects the ActiveX control for the Snapshot Viewer for Microsoft Office Access 2000, 2002 and 2003.

The ActiveX control, which allows a user to view an Access report snapshot without having the standard or run-time versions of Microsoft Office Access, ships with the standalone Snapshot Viewer and with all supported versions of Microsoft Office Access except for Microsoft Office Access 2007.

By default, Internet Explorer on Windows Server 2003 and Windows Server 2008 run in a restricted mode known as Enhanced Security Configuration that sets the security level for the Internet zone to "high." This is a mitigating factor for Web sites that a user has not added to the Internet Explorer Trusted sites zone, according to Bill Sisk, security response communications manager for Microsoft.

In addition, a security feature in Internet Explorer can be set to prevent ActiveX controls from being loaded by the IE HTML-rendering engine, the advisory says.

Microsoft suggests that users adopt a workaround, such as configuring IE to disable Active Scripting or to prompt before running it, or setting Internet and local intranet security zone settings to "high" to prompt before running ActiveX Controls and Active Scripting.

Eventually, Microsoft may provide a security update for the vulnerability, according to the frequently-asked-questions section of the advisory.

"While the attack appears to be targeted, and not widespread, we are monitoring the issue and are working with our MSRA (Microsoft Security Response Alliance) partners to help protect customers," Sisk says.

Wall Street is largely keeping a cautious eye on Yahoo, despite Microsoft's announcement on Monday that it is interested in negotiating a possible buyout of Yahoo's search assets, or potentially making a renewed bid for the entire company.

Analysts, overall, still have a "hold" recommendation on the stock, according to Thomson Financial's survey of 34 financial analysts who follow the stock. Only one analyst has upgraded a recommendation on Yahoo in the past two weeks, raising it to a "hold" from a "sell" on June 25.

Nonetheless, Yahoo soared as high as 13 percent to $24.14 a share in early trading Monday, following Microsoft's announcement that it would support activist investor Carl Icahn's proxy fight to oust Yahoo's current board and negotiate a possible deal with Icahn's slate of dissident directors, should they be elected at Yahoo's August 1 annual shareholder meeting.

Wall Street analysts are more bullish on the notion that Icahn may prevail with his proxy fight, now that Microsoft has come out with a statement of support for his efforts and interest in negotiating with a "new" Yahoo board about a potential acquisition of the company's search business or a possible renewed bid for a buyout of the entire company.

"With his most recent statement, Icahn has effectively put tremendous pressure on (Yahoo CEO) Jerry Yang to maintain support of shareholders, given that Microsoft says it will not be able to reach a suitable deal with the current board," Gene Munster, a senior research analyst with Piper Jaffray, said in a research note.

Munster raised the prospect of an Icahn board gaining control to a 50 percent likelihood from a 30 percent chance.

"While talks with Ballmer and statements from Microsoft make voting for Icahn's board more attractive for the near term, we expect shareholders would like to see Icahn announce a CEO candidate or other operational plan for the future so that a Microsoft deal is not the only option," he added.

And while Microsoft in its statement said it would be interested in discussing either a partial asset acquisition of Yahoo or an entire buyout of the company, Wall Street places high expectations on a buyout of all of Yahoo.

"Throughout this courtship, our view has been, and continues to be, that at some point, Microsoft will acquire all of Yahoo, as we still think Microsoft needs Yahoo to gain scale in the online business and to compete effectively against Google," UBS analysts Bejamin Schachter and Heather Bellini stated in a research note.

The analysts added that they expect that an acquisition of the entire company would likely be in the range that Microsoft was previously willing to pay, which was initially a deal valued at $31 a share and later bumped up to $33 a share.

"We believe that an acquisition of the whole company is now likely in the $31 to $33 range, as we think anything less than $31 could make the deal viewed as even more unfriendly by key Yahoo employees, a constituency that Microsoft wants to make happy at all costs," the UBS analysts noted.

Yahoo was hit with a one-two punch Monday--first a right jab from Carl Icahn, which is calling for the removal of Yahoo's entire board, and then a left hook from Microsoft, which confirmed its support for Icahn's proxy fight and said it's interested in negotiating a deal with a "new" Yahoo board.

Microsoft, in its public statement, said it could see the value in a potential Yahoo deal, to either purchase the 'search' function with large financial guarantees, or alternatively, purchase the whole company--a been there, done that attempt with Yahoo's existing board.

Yahoo counterpunched later Monday morning, issuing a statement (given here in its entirety) expressing its interest in talking to Microsoft about a buyout of the entire company, if only someone would make an actual offer, and the right kind of offer:

Yahoo!'s Board of Directors continues to stand ready to enter into negotiations with Microsoft Corporation for an acquisition of Yahoo!. Indeed, as recently as June, Yahoo!'s independent directors and management approached Steve Ballmer about just such a transaction, only to be told that Microsoft was no longer interested even in the price range which they had previously proposed. Now Mr. Ballmer and Mr. Icahn have teamed up in an apparent effort to force Yahoo! into selling to Microsoft its Search business at a price to be determined in a future "negotiation" between Mr. Icahn's directors and Microsoft's management. We feel very strongly that this would not lead to an outcome that would be in the best interests of Yahoo!'s stockholders. If Microsoft and Mr. Ballmer really want to purchase Yahoo!, we again invite them to make a proposal immediately. And if Mr. Icahn has an actual plan for Yahoo! beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it.