There's no question that, at this point, Yahoo! (NASDAQ: YHOO) needs to partner up with some company. I didn't see the logic behind the Microsoft (NASDAQ: MSFT) interest in Yahoo! I thought then -- and still think now -- that Microsoft didn't need a big brand in the Internet portal space. It's doing fine with its own MSN.com, its operating-system monopoly and current portfolio of investments.

However, I see the merit in a deal between Yahoo! and Time Warner (NYSE: TWX). The following article discusses the possibility that Time Warner and Yahoo! are talking about a combination. Since Time Warner owns AOL, and since AOL has been transforming its business model over the last few years to capture a more advertising revenue, Time Warner would be wise to at least consider the transaction. Leveraging both brands would generate a lot of clout when it comes to advertisers, who would look at the platform as a must-buy to reach the surfing eyeballs.

There would be many other areas of synergy between the two companies and, of course, the potential to cut redundant costs. Or course, the deal would have to make financial sense and who knows if Yahoo! CEO Jerry Yang will be reasonable.

I think we'll be hearing more about Time Warner and Yahoo! in the coming weeks. However, I don't think anyone should place trades in these stocks based on deal speculation. Buy them for other reasons, but not for purposes of gambling on potential headline news.

Disclosure: I don't own any company mentioned; positions can change at any time.

On June 30, 2008, the last PCs with Windows XP were sold (theoretically) and Microsoft (NASDAQ: MSFT) went hard on Vista, its less than celebrated operating system. I was one of the hold outs, opting to buy my laptop with Windows XP last year even though Vista was being touted as the latest and greatest system. Today, I am sure the remaining XP devices are going for a premium.

What does this mean for the future of PC sales? I think there will be some measure of reduced PC sales in the short run just because the economy is already suffering and consumers and businesses are looking to stretch their devalued dollars.

It also means that some people that do not want the burdensome Vista system and all the baggage that goes along with it will be opting for Apple (NASDAQ: AAPL) Macs. There are many people like me who have been weighing the switch to a Mac for a while. The rest of my household has made the switch (4 Macs, 1 PC) and I did consider this prior to my last purchase. I may swing the other way next time.

For other PC users who remain satisfied with XP, they may not only think to stretch their dollars, but try and hang onto their PCs longer until the value proposition for Vista becomes more convincing. I can always add more memory or speed to my existing computer.

I do not know what the trade-off is for Microsoft. It would make money selling the XP system as well as the Vista system. Any slowdown of PC sales or continued movement toward Apple products has to hurt revenue a little?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.

This past holiday weekend my colleague Doug McIntyre gave support to a blog I wrote in May 2007 when he posted Google (GOOG): The Failure Of YouTube. In my rant I gave a detailed analysis outlining how Google had overpaid for YouTube by a fantastic amount.

In the story Doug quotes projections that 2008 revenue generated by Google might gross $200 million from YouTube. That's revenue, not profit. A 20% profit would be $40 million if that was possible. In the article I wrote: How can I say Google overpaid for YouTube? I stated the case in plain English why the YouTube investment would have to earn $300 million (net, not gross) minimum, in its first year not to be dillutive.

They missed the target by a mile. They will continue to miss the target and I do not expect it to ever justify the cost. Just because Google has lots of cash slushing around does not mean they have money to waste.

The war of words between Yahoo (NASDAQ: YHOO) and dissident shareholder Carl Icahn is intensifying. Last week, Yahoo attached a PowerPoint-style presentation to an SEC filing, bizarrely raising questions about Icahn's track record as a stock picker.

Now Icahn is back with a new letter, issued as a press release titled Icahn Issues Open Letter to Shareholders of Yahoo. Icahn confirmed that he has been in frequent communication with Microsoft (NASDAQ: MSFT) CEO Steve Ballmer over the past week. Icahn wrote that "Steve made it clear to me that 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."

Lest you think Icahn is blowing smoke, Microsoft followed up with a response to Icahn's statement issued five minutes later, saying, "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."

This should sway a lot of investors over to Icahn's side in the proxy fight. With its stock having been a weak performer over the past five years, the company is clearly in a position where it needs to be considering strategic alternatives. Microsoft has made it clear that it is not interested in working with the current board on a possible deal and it's in the best interests of shareholders that the company be represented by people who are willing to do what is right for them.

I think we can start the countdown to CEO Jerry Yang's departure to spend more time with his family and charitable endeavors. The market seems to agree, with the stock up nearly 10% MOnday.

Microsoft (NASDAQ: MSFT) wants to expand the reach of its vital Office suite of products. The software giant wants to utilize a subscription model for the collection of programs. The initiative will commence later this month at Circuit City (NYSE: CC) and it will eventually reach other retail stores. People will also eventually have the option of accessing the subscription product via computers such as ones made by Dell (NASDAQ: DELL). The cost is reported to be $70 for twelve months of Office access.

This is an interesting scheme. As the article points out, businesses might not bat an eye at subscribing to software applications, but for consumers, this is a different ballgame. Many of us, myself included, are so used to going down to a Best Buy (NYSE: BBY) to purchase a software package for a flat fee that paying yearly dues just seems like an alien concept. And I'd say this goes double for something as large and complex as the Office program. Microsoft believes that $70 on an annual basis will be perceived as cheap and will expose consumers who might normally either seek upgrades on a pirated basis or who would simply continue using older versions to regular approved updates. It is a large investment, after all, to upgrade to a new iteration of Office.

Microsoft would be wise to market the heck out of the subscription model for Office, taking full advantage of the inflationary environment we are currently in. If potential users can be convinced of the value proposition, then they could eventually become hooked on the promise of upgrades over time for the relatively economical price indicated. Checking around on the net, I notice that a lot of the negative comments about this idea center on the fact that there are already free alternatives out there to Office, such as applications offered by Google (NASDAQ: GOOG).

MAJOR PAPERS:

• According to people familiar with the situation, the Wall Street Journal reported that Yahoo! Inc (NASDAQ: YHOO) is again talking to Time Warner Inc (NYSE: TWX), this time about taking over AOL, with Time Warner taking a stake in the combined entity. News Corporation (NYSE: NWS) has its eye on any Yahoo moves. Meanwhile, Microsoft Corporation (NASDAQ: MSFT) is considering what its next move against Yahoo might be and is talking to News Corp.
• The Wall Street Journal also reported that, as part of the company's plan to cut costs, Tribune Co's Los Angeles Times newspaper may look to cut about 250 jobs, including about 17% of its news staff.
• The Financial Times reported that Chrysler, which has been searching for foreign partnerships, signed with China's Great Wall Motor a memorandum of understanding to explore long-term business ties in areas that include technology, distribution and components.

OTHER PAPERS:

• According to the Dallas News, AMR Corporation's (NYSE: AMR) American Airlines informed its flight attendants' union that is may lay off 900 flight attendants on August 31.

WEB SITES:

• Yonhap reported that LG Electronics will release "Dare," a new touch-screen mobile phone in the U.S. that will compete with Apple Inc's (NASDAQ: AAPL) latest iPhone models.

For those of you who own blue-chip stocks, this is an eye-opening prediction. An article at CNBC.com talks about the possibility of Dow 10,000. Dow 10,000!

I repeated that in case you didn't get it the first time. It sounds pretty scary to me, and it should sound pretty scary to a lot of you out there. I'd have to presume that most investors don't use the stock market primarily as a substitute casino for the times when Las Vegas is out of reach. Many of you out there must own a Disney (NYSE: DIS) or a Coca-Cola (NYSE: KO), maybe a General Electric (NYSE: GE) or a Microsoft (NASDAQ: MSFT), something generally considered core and safe for the long-term. I happen to own the first three. Anyone who does is in for some huge volatility if Dow 10,000 comes along.

Actually, whether it comes along or not, volatility is here to stay. And here's the thing about the Dow 10,000 prediction: it isn't so farfetched on a mathematical basis. When you first read that number, you say to yourself "No way, that would be like a depression!" But because the numbers are getting higher, the actual point moves aren't as dramatic as they may seem on the surface. If we hit 10,000, that would represent a decline of approximately 29% from the high reached back in October 2007. As I write this, the Dow is about 20% off the high. Is another 9% feasible?

In a PowerPoint-style presentation intended to rebuke criticism of its commitment to enhancing shareholder value, Yahoo! Inc. (NASDAQ: YHOO) attacks Carl Icahn's recent track record as an investor.

One slide points out that 11 of Icahn's 15 most recent investments in public companies have declined in value since he took his position. But what exactly is Yahoo!'s point? That Icahn is a lousy investor and probably wrong for investing in Yahoo! too? If that's the case, then they'd better sell the company while they can before it turns into another Icahn dud!

MAJOR PAPERS:

• According to people familiar with the discussions, the Wall Street Journal reported that Microsoft Corporation (NASDAQ: MSFT) has held discussions with Time Warner Inc (NYSE: TWX) and News Corporation (NYSE: NWS), among others, about joining it in a deal that could lead to the breakup of Yahoo! Inc (NASDAQ: YHOO). Some of the sources said the preliminary talks are unlikely to result in a deal with Yahoo!
• Johnson & Johnson (NYSE: JNJ) is reportedly in exclusive talks to sell its wound-care business Ethicon to the private-equity arm of JP Morgan Chase & Co (NYSE: JPM), according to the Wall Street Journal. Terms of the potential deal were not disclosed.

OTHER PAPERS:

• Sources familiar with the inquiry said that the Justice Department has opened a formal antitrust investigation into a deal that would allow Google Inc (NASDAQ: GOOG) to provide some search advertising for Yahoo!. The Washington Post reported that investigators will demand documents from Google and Yahoo!, as well as other large companies in the media and Internet industries.

WEB SITES:

• Reuters reported that regulators in the European Union are looking at the long-term effects of BHP Billiton Limited's (NYSE: BHP) $170B bid for Rio Tinto Group (NYSE: RTP). Sources familiar with the EU questionnaire said regulators have asked competitors and customers about effects of the deal on their businesses through 2015.

Six months of 2008 are now behind us and the stock market has not been a friendly place to most investors. Stability that was once found in household names that were industry giants is gone, and they have now been brought to their knees.

Many of them were the stocks we might have looked to in the past for stability, so you can be sure I put forward my five candidates with a little trepidation, but forward I go anyway. First a little review is in order.

Citigroup Inc. (NYSE: C) dropped from around $53 per share last year to around $30 in January and we can buy it today for around $17. Even at that price Goldman Sachs (NYSE: GS) has downgraded it to a sell and thinks there is more bad news to come. Citigroup was the largest bank in the world. Not any more.

General Motors (NYSE: GM) was the largest car maker in the world. That was before the stock tumbled from $43 to its current $11 range. A crushing blow to long time investors hoping that someone in the company could stop the ship from sinking.

Yahoo's (NASDAQ: YHOO) embattled management and board have one month left to prove to shareholders that they made the right call in rejecting Microsoft's (NASDAQ:MSFT) bid. With shares trading at about $20, they are going to have to do some fancy footwork to show why rejecting a $31to $33 per share offer was actually good for shareholders.

Yahoo is trying to convince investors that a proposed 'search' deal with Google (NASDAQ:GOOG) will provide the growth needed to restore Yahoo to previous glory. According to an AP report: " By relying on Google's superior technology to show some of the ads alongside its search results, Yahoo believes it can increase its annual revenue by about $800 million and generate another $250 million to $450 million in annual cash flow."

Keep in mind that since the Microsoft deal fell apart, Yahoo has lost more than $16 billion in market cap. It is going to have to generate a lot more in revenues to show that they made the right choice.

My other problem is that I have many friends who over the last week have told me they can't access their Yahoo mail or open up their saved stock portfolio's on Yahoo Finance. I, personally, have been locked out for two days.

I read an article over the weekend about Yahoo! Inc. (NASDAQ: YHOO) and its reorganization attempts. Make no mistake about it, this company needs to alter its DNA if it intends to survive in a world without a Microsoft Corp. (NASDAQ: MSFT) taking it over.

In a nutshell, it looks like Yahoo! wants to retool its divisions so that it can more efficiently react to changes in the online marketplace. Yahoo! apparently feels that its current organizational structure inhibits growth and is looking to create new teams dedicated to developing products that will capture eyeballs and advertising opportunities as quickly as possible. The company also wants to focus on cloud computing, a technology that is important to the business sector.

Well, from the point of view of an investor looking at Yahoo!, I don't see anything here that persuades me to buy the stock. Synthesizing a new plan of corporate attack is pretty much par for the course for any company that is doing terribly and is looking to get back on the good side of Wall Street. But is there anything really exciting in the plan? No. It's just Yahoo! doing something. There's nothing too revolutionary going on. Centralizing this and that might add value. It also might not. It's all in the execution, and I'm not sure I want to trust a company that rebuffed Microsoft's reasonable buyout offer to execute anything at this point.

It should be no surprise to anyone that despite all the ranting and raving to the contrary Mr. Carl Icahn, billionaire investor, shareholder white knight and corporate raider is heating up things in the Yahoo! Inc (NASDAQ: YHOO) boardroom.

It has been reported that he purchased a sizable chunk of the company in the neighborhood of $25 per share, hoping to make another fortune pushing Yahoo back to the negotiating table with Microsoft Corp. (NASDAQ: MSFT).

This morning AP reported that Jerry Yang, CEO and company are lobbying major shareholders to rally support for their position that Yahoo! should get a higher offer or stand alone as an independent company. It seems to me that they are standing on lose ground given that many large and small shareholders alike have already spoken, and they would have taken the deal.

The market has spoken as well, with Yahoo stock losing over a third of it's value recently and nearing $20 per share this morning Icahn is losing 20% of his investment as things look today. This is turning into the battle of the billionaires.

One small problem the billionaire boys in Redmond are not that hot on the deal any more because, as Gates Leaves Microsoft, he Calls Yahoo Deal Unlikely.

I think this whole saga might make a cute Neil Simon play if they would let him into the meetings to take some notes.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares in the stocks mentioned in this story.

Man, it stinks to be Sony (NYSE: SNE). According to Forbes, the media company has lost $3.3 billion on its PlayStation 3 console so far. Wow. When the mighty fall, they fall hard. The PlayStation 3 is a heck of a powerful system, but the Nintendo (OTC: NTDOY) Wii has captivated players not only with its innovative nature, but with its affordable price. Right from the start, Nintendo decided to go with less costly components so that each console sold would generate a profit. Its retail price of $250 is a lot better than $500 to a consumer's wallet, especially when a cheaper system is also a lot of fun.

And talk about a hit to PlayStation's brand equity. Here's what most people think about the third PlayStation (from my experience at least): it doesn't have a lot of games available, there aren't many kid-friendly titles offered, I don't want to pay that much for a PlayStation system so I'll just wait for further price cuts. Boy, imagine if Sony has to cut the price even further. Sony already loses a bundle on each system.

Not only is Nintendo hurting Sony, but Microsoft (NASDAQ: MSFT) and its Xbox 360 is also out there causing damage. You can pick up a low-end version of the Xbox 360 without a hard drive for around $280. Too bad Sony decided to incorporate Blu-ray and hard drives into its business model for the PlayStation 3. Admittedly, I thought it was the right thing to do at the time as well, but I guess Sony and I have been proven wrong.

Let's do a quick review of Jerry Yang's first year and a day since he became CEO of Yahoo (NASDAQ: YAHOO). The stock has lost about 20% of its value, and Yang botched merger negotiations with Microsoft (NASDAQ: MSFT) despite Microsoft seeking to acquire the company at a substantial premium to its current price. Investors fled for the exits after that. Now Yahoo has lost three executive vice presidents, two senior vice presidents and numerous other important executives -- including Flickr cofounders -- after the failure to work out a deal with Microsoft.

Oh and, just for fun, Carl Icahn is rattling his proxy fight saber, alleging that Yang and the board of directors "acted irrationally and lost the faith of shareholders."

All of this raises an interesting question: what exactly does Jerry Yang have to do to lose his job? Get arrested for drunk driving and go on a vicious tirade, a la Mel Gibson? Or perhaps he should try exposing himself in public? I mean, he is trying to get fired, isn't he? If he isn't, he's doing a darn good job acting like he is.

Many commentators have said that Icahn's demand that the company's entire board be ousted is excessive. But every day that Jerry Yang remains CEO is another indication that Yahoo's board is completely incompetent. If Yang has lost the faith of shareholders and top executives, what exactly is the board waiting for?