The Associated Press reports that talks between Microsoft Corp. (NASDAQ: MSFT) and Yahoo (NASDAQ: YHOO) may be back on. In a statement Sunday, Microsoft says it is considering a different kind of deal with Yahoo. "Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative."

This news will come as good news to Carl Icahn who launched an effort to oust Yahoo's board. I think he is an aggressive representative of the wave of institutional investors who would like nothing more than to make a quick buck on their Yahoo shares. Those investors were sorely disappointed that Microsoft and Yahoo could not come to terms on a deal a few weeks ago.

However, the current talks seem quite vague at this point. Yet they could be Yahoo's direct response to Icahn who, according to the Wall Street Journal, told Yahoo's board it could quickly quell Icahn's shareholder revolt by renewing negotiations with Microsoft -- but Microsoft warned that it's possible no deal will be struck. So we wait...

Update. The New York Times reports that Microsoft is proposing a search-engine marketing alliance with Yahoo to help Microsoft gain share against Google Inc. (NASDAQ: GOOG). Yahoo could announce a formal agreement on a partnership with Google this week. A Yahoo-Google partnership, which is likely to face antitrust scrutiny, could make Yahoo a less desirable partner or takeover candidate for Microsoft.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.