Kara Swisher

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Microsoft Hits Back At Yahoo, But Offer Still Stands–With or Without Carl Icahn

Microsoft hit back at Yahoo’s account of its weekend talks about a search deal, in their own statement this afternoon, noting that “Microsoft believes the statement contains inaccuracies that need to be corrected.”

BoomTown translation of what Microsoft was saying about Yahoo: Liar, liar, pants on fire.

(Here is the full text of Microsoft’s statement.)

The discussions for an enhanced search deal, which were brokered by activist investor Carl Icahn last week, are the latest flashpoint of the contentious but increasingly tedious battle that has broken out over the fate of Yahoo.

Those talks collapsed on Saturday, after Yahoo (YHOO) rejected the new terms, most especially a stipulation that Icahn take over the rest of Yahoo left over, after Microsoft (MSFT) bought its search business and Yahoo’s Asian assets were sold off.

But a source close to Microsoft’s thinking told BoomTown this afternoon that it still offering the sweetened search deal without the requirement that Icahn take over.

“We want to do the search deal,” said the source. “The new deal is not dependent on Carl.”

The source did not give specifics on whether Microsoft would resubmit its offer to the Yahoo board or if the company felt it needed to.

Meanwhile, Icahn is waging a proxy battle against Yahoo and upped the ante on today by writing yet another angry letter about Yahoo, in the wake of the latest mess.

He and Microsoft joined forces a week ago, but even that seems subject to change.

A source close to Yahoo’s thinking disputes Microsoft’s account: “It was a joint proposal. They were on the phone together with us on more than one occasion pitching it. And look at point C in Carl’s release today–he admits governance was in it. This is completely disingenuous by Microsoft.”

Oh, the plot just keeps thickening, doesn’t it?

Nonetheless, in its statement, Microsoft did not even bother to hide its disdain for Yahoo, pretty much saying it had improved the deal to Yahoo Chairman Roy Bostock’s specifications.

And, indeed, the deal is much better, adding more guaranteed revenue, an increase in the TAC (traffic acquisition costs).

But, as opposed to Yahoo’s account, the Microsoft statement noted, “Microsoft’s proposal did not include changes to Yahoo’s governance.”

And so it goes.