Microsoft announced that it has proposed an alternative workaround deal to Yahoo Inc. instead of an all-out complete acquisition. Microsoft stated that it was not making a new bid to buy Yahoo entirely, but might reconsider if that would stall the proxy battle being planned by Yahoo investor and billionaire financier, Carl Icahn. 

The New York Times has reported that there could be a joint venture or partnership formed by Microsoft and Yahoo to compete with Google, Inc., the dominant Web search tool. Rumors are still circulating that Yahoo is in talks with Google regarding a search advertising partnership.

Microsoft issued the announcement after Carl Icahn stated he would launch a proxy campaign to replace Yahoo's Board of Directors with his own slate of new Directors and essentially force Yahoo to return to the negotiating table with Microsoft.

Icahn claims that the Board of Yahoo acted irrationally in refusing a $47.5 billion bid from Microsoft. Microsoft has not had any discussions with Icahn about Yahoo, according to a source at Microsoft. Neither Yahoo nor Icahn offered any comment on this.

The response from Yahoo’s Board of Directors indicated that the company would do what was in the best interests of Yahoo stockholders, stating it would "evaluate each of our alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximizing stockholder value."

Financial analysts were evenly split on whether an alternative deal is as beneficial to Yahoo as a complete buyout and merger. One analyst at Fort Pitt Capital Group, Kim Caughey, indicated that the announcement would cause Yahoo shares to rise and Microsoft’s shares to fall. But Caughey indicated that there could be concern over who was in charge if the deal reach with Yahoo and Microsoft is a minority investment or a joint venture.

Microsoft announced that it had abandoned its pursuit of Yahoo two weeks ago after several months of negotiations fell apart. Yahoo's Board or Directors rejected Microsoft's “sweetened” offer of $33.00 per share, countering that Yahoo’s shares were worth at least $37.00 per share.