The Microsoft Corp. (NASDAQ: MSFT) -- Yahoo Inc. (NASDAQ: YHOO) merger dance is not quite over yet.

In an open letter to his fellow long-suffering Yahoo shareholders, billionaire Carl Icahn disclosed that he has spoken "frequently" with Microsoft CEO Steve Ballmer; "frequently" over the past week about Yahoo. Ballmer indicated to Icahn that the world's largest software company would still be interested in doing a deal ... with one catch.

"Steve made it abundantly clear that, due to his experiences with Yahoo! during the past several months, he cannot negotiate any transaction with the current board," Icahn said. "If a new board were elected, he would be interested in discussing 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. He stated that Microsoft would be willing to enter into discussion immediately if the new board that has been nominated were elected."

In a separate press release, Microsoft underscored Icahn's statement, adding that despite speaking with Yahoo!'s board since last year, the company decided that it cannot reach an agreement with the current board. Can you say trial balloon?

That's a big "if" of course. Getting rid of a sitting board of directors is something that is difficult for even for the likes of Icahn. But Yahoo shareholders are so angry at Chief Executive Jerry Yang that the momentum in this fight is certainly on Icahn's' s side. Moreover, Microsoft shareholders are chomping at the bit for the Redmond, Washington company to do something to compete against Google Inc. (NASDAQ: GOOG). Wall Street is cheering the news, sending Yahoo shares soaring more than 10%.

The exuberance, though, may not last, because takeover battles move in fits and starts. Odds are that Microsoft and Yahoo will join forces eventually. It's just a question of how.