Shares sold short in Microsoft (NASDAQ: MSFT) fell 14.1 million shares in September to 83 million. It seems that the shorts knew enough to get out ahead of good news.

So far this year, Microsoft's stock has been flat, but over the last three days it has moved up more than 3% on news that it had released its Halo 3 video game and that it is in talks to buy part of social network Facebook.

The enthusiasm about Halo may be well-placed. In the company's last fiscal year, its devices business lost $1.9 billion on $6.1 billion in revenue. The previous year was not any better. The world's largest software company needs a catalyst to drive sales of its Xbox 360, and Halo 3 may well do that.

The Facebook deal has also drawn a great deal of attention. Rival Google (NASDAQ: GOOG) is building a large advertising platform using its own search inventory combined with impressions that it gets from its AdSense network. To expand that business, it is buying DoubleClick and has a deal to sell ads on social network leader MySpace. AOL is making moves in the same business. It owns Advertising.com, the largest ad network, and has just bought behavior targeting company Tacoda.

That leaves Microsoft sitting well behind its rivals. A deal with Facebook could help expand a network around its portal, MSN. Online services lost $732 million last year.

It may be that the company is facing up to its online and devices problems. That could be good news.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Time Warner Inc. (NYSE: TWX) is sending its AOL corporate headquarters to New York City, where it can be closer to the Time Warner Inc. parent and closer to the ad markets. While this is a significant shift, this is not an entire relocation of the unit. Upon hearing of the AOL headquarters move the first thought was that this was going to be a move of thousands of workers, although that does not appear to be the case after looking through the news.

The largest transition here is integrating all of its newly acquired advertising properties into a new entity called Platform A, building on its Advertising.com network and the recent acquisitions of TACODA, Third Screen Media, Lightningcast and ADTECH. Platform A already reaches more than 90% of the domestic online audience, according to comScore Media Metrix. This was an area I had noted before as being the brightest spot inside the company if you looked at the total reach.

AOL will relocate its corporate headquarters to 770 Broadway in New York City, where the company has leased office space and where AOL's New York-based advertising and programming operations also will be based. According to the press release, AOL will continue to have significant operations in Dulles, VA, as well as offices in Mountain View, CA, and other locations.

AOL's Randy Falco and Ron Grant also present tonight at Merrill Lynch's Media & Entertainment Conference at 7:00 PM. At the same link you'll see that Dick Parsons, Chairman & CEO, will present at the Goldman Sachs Communacopia Conference tomorrow at 2:05 PM EST.

Time Warner Inc. (NYSE: TWX) has received the required clearance to acquire Tacoda Inc., a company that targets ads based on a web user's browsing habits. There is no issue with this deal clearing. Time Warner could acquire 100 companies like this and the Federal Trade Commission and Department of Justice would rubber stamp every single deal.

It is almost funny that the two recent big media and online buys -- Microsoft Corp. (NASDAQ: MSFT) has bought aQuantive and Google Inc. (NASDAQ: GOOG) has acquired DoubleClick -- are still being reviewed by some. Those purchases cannot be reversed.

Back to Time Warner and AOL: AOL has found itself in a predicament over backing away from prior estimates for "faster than market growth" for its search-related advertising sales. But if you look back at last month's comScore numbers, as we pointed out earlier, you will realize that AOL has a massive reach through its Advertising.com division. Any such deal that can incrementally ad both new advertising groups and that can reach more people will be an opportunity for incredible advertising leverage.

It's hard to cover a company like Time Warner one unit at a time. Many in the media still want to only cover negative aspects of the company, and considering it is a shot at bashing a competitor it is hard to blame them. Just last week, AOL launched Truveo. AOL may be its own entity next year if my thought process is accurate and the clouds drift the way they have historically. This will allow it to keep adding small strategic plays that can help grow both AOL and the other Time Warner brands. That will be a winning recipe for the company, and should be a winning recipe for shareholders.

Jon Ogg is a partner at 24/7 Wall St, LLC. He produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.

I've known Dave Morgan, the founder of TACODA, for some time. Back in 1995, he founded Real Media, which was a pioneer of online ad networks.

No doubt, he's one of the top thinkers in the space – and has been a great source for my stories at BloggingStocks.

Well, today TACODA announced it is selling to AOL, a unit of Time Warner (NYSE: TWX) and also the owner of BloggingStocks.

Morgan has proved himself a step ahead of the technology curve and TACODA is no exception. The company is a leader in so-called "behavioral targeting" for online ad networks. Basically, it means an ad can be based on such things as preferences, age, gender and so on.

It's cool stuff – but not easy to pull off. Also, it's something that needs a lot of scale. And that's why a deal with AOL makes a lot of sense.

In fact, according to a study from eMarketer, the behavioral targeting market is forecast to grow from $350 million in 2006 to $3.8 billion by 2011.

So where's Morgan going now? Actually, he said he'll be moving over to AOL (this is according to an email exchange I had with him this morning).

If you want to check out more recent M&A deals, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

This week, I met with Dave Morgan, who is the CEO and founder of TACODA, a company that develops technologies for online advertising. In fact, he is one of the pioneers of the online advertising business – as he was the founder of Real Media, which is now 24/7 Real Media

He made the interesting point that Google is really just an electronic yellow pages business.  However, it is an extremely scalable one.

It also has a great business model.  That is, an advertiser only pays if a user clicks on a text ad.  This is known as cost-per-click (CPC).

However, this is not necessarily the best approach.  What if a user clicks an ad but does not buy anything? 

So, now Google is experimenting with another model: cost-per-action (CPA).