[UPDATED: I added a stronger first sentence to leave no doubt about there is no Microsoft-Yahoo deal at the present time and to be clear I am not backing off on my weekend post on the topic.]

Let me be crystal clear: Yahoo and Microsoft are not currently secretly at work on a pricey new search partnership and a piece this weekend in the Times of London that said they were is inaccurate.

It’s natural for the idea to be brought up, since they have talked about such a deal many months ago and have indicated publicly and recently that they should again in the future, so smart betting is correct in guessing that they probably will do some sort of search deal in the months ahead.

But this was put out as a supposedly reported piece, and it was wrong. There is no deal at this time, according to my sources and reporting, which has been pretty accurate overall on Yahoo.

Still, various unsubstantiated rumors pop up weekly about deals between the pair, which are about as convoluted as a mash-up of “Richard III” and “Macbeth,” with some “Three’s Company” thrown in for comic relief.

The core problem is, of course, that for the past year or so with regard to Yahoo (YHOO), truth has indeed been stranger than fiction.

Consider:

A founder takes over after a stumble from a Hollywood mogul, whereupon the sweet-natured Silicon Valley icon also fumbles. But, before he can right himself, what ho!–a dastardly midnight takeover attack by a giant invader from the rainy North.

Then another attack from the greedy East from a sneaky raider named Carl. And, next, a possible rescue from a powerful do-no-evil neighbor that turns into more of a do-some-harm result.

And, all along, more stumbles and bumbles, as the stock slides and employees flee like rats from a sinking ship. The founder founders, while all kinds of plots of usurping unravel around him.

He is, ultimately, banish’d (well, sort of).

You might think all this real-world plot would satisfy even a fan in need of a serious fix, after “Heroes” ran off the rails in its second season.

But no, the false rumors–all wrapped cleverly in some obviously logical suppositions–that have swirled around Yahoo have been breathtaking in both the level of stock manipulation clearly involved and their ability to be swirled around the Internet quickly enough for some vulture to make a killing on an endless willingness to believe anything.

Such was the case this weekend, with yet another story–this time in the Times of London–about Microsoft (MSFT) and Yahoo being involved in yet another hook-up.

Similar previous such reports have turned out to be bogus, but did always give the much beleaguered stock a short-lived bump upwards.

This time out, the Times told about a very complex search deal in detail, worth $20 billion, which was–of course!–imminent.

And–as an added plus, since Yahoo’s other story thread is a new CEO search too–the story also involved a pair of well-known Internet execs–Ross Levinsohn and Jon Miller–taking over as the new managers of the company.

The problem was that top sources at both companies rushed to deny it.

There were also serious insider trading issues for a major investor and board member, Carl Icahn, if it were true. He just loaded up on Yahoo shares a week ago.

And, oh yes, one of the co-CEOs-in-waiting, Levinsohn, told me he was not contacted by the Times (and neither was Miller, as far as he could tell) about his becoming leader of Yahoo.

Thus, he called the tale–on the record, mind you–”total fiction.”

Well, not total fiction, actually, because–as in all things–there has always been a grain of truth to the idea of some kind of deal for Microsoft to buy or monetize Yahoo’s search assets eventually taking place.

And who whispered that juicy nugget to me? Well, actually, both companies have said so loud and publicly many times recently to the whole world. Outgoing Yahoo CEO Jerry Yang did in an onstage interview in early November, as did Microsoft CEO Steve Ballmer in another appearance.

And this week, Icahn said it again in an interview with Barron’s:

“I’ve said this before: Yahoo! should make a deal with Microsoft as far as selling its search capability…Microsoft has said publicly that they are not interested in buying the whole company, and I believe them. But they are interested in doing a deal on search, and we should pursue that.”

That’s pretty clear, I would say, on potential direction. And, it probably means both sides are surely getting there ducks in order to imagine such a deal, which does not take a lot of brain cells to surmise.

The Yahoo leadership that has resisted such a deal is on its way out, although there still remains significant resistance to it by some board members, which Icahn also said was true in that Barron’s interview.

But I would guess that the new CEO will be hired partly on the basis of being able to make nice with Microsoft.

And rather than get caught up in internal Yahoo corporate machinations, as it did to bad results in its earlier takeover attempt, one would assume Microsoft is patiently waiting to do a deal with a more willing team and board, if it can.

After all, it no longer has Google (GOOG) to compete with now that the search giant’s deal with Yahoo collapsed, due to much deserved regulatory scrutiny.

If Yahoo wants a search deal, it has no other real choices save Microsoft (except not to do a deal, of course).

But that kind of simple logic–as in, these corporate deals are more messy and slow than stealthy and well thought out–still seems to escape some.

One grassy-knoll type, in fact, expressed that proof-absent sentiment perfectly in this post about the Times story, which I underscore was not speculative, but represented as actual reporting:

“What we don’t know out of all of this is what’s truth or fiction, despite the latest denials.

Companies and governments like to deny all kinds of things before a deal is magically struck, taking everyone by ’surprise’ yet again thanks to all the denials.”

Yes, it makes perfect sense! All these people and companies, all of whom don’t particularly like each other–including two principals who said they have heard nothing of the deal, despite the fact that they were to be co-CEOs of the resulting company–are all involved in a coordinated plot of deception that rivals anything Jason Bourne could unravel.

But let’s get a dose of reality, shall we? Just because some think there should be a deal between Microsoft and Yahoo and they both publicly indicate there could be, it simply does not count as actionable news, until it actually happens or there is a well-reported story that it is about to.

You can certainly prepare for such a thing and work it into your future stock price formulas, but these rumor eruptions are useless to anyone who cares about being an informed investor.

And if a deal between Microsoft and Yahoo is struck, that does not make the false rumors correct either.

If that was the case, score one for stock manipulators, who are no doubt behind a lot of this stuff.

My second vote for leak candidates goes to under-employed bankers, because–as one smart Internet exec noted to me yesterday–”there are more deal-doers than deals these days.”

Ain’t that the real and confirmed truth, forever and always?

Here’s a bright spot in Yahoo’s third-quarter earnings announcement later today: Sources told BoomTown that the company will not announce a specific number of layoffs tomorrow, although it will give an overall percentage of employees and costs to be cut.

In other words, you get to practice your long division and multiplication skills! Fun!

(For those who want to cheat, as I previously reported, it will still be about 1,500 jobs cut.)

Other than that, of course, when Yahoo CEO Jerry Yang gets on the horn at at 2 p.m. Pacific Time, the outlook is likely to be a wall-to-wall glumfest.

Well, no wonder, given what is likely to be on the agenda: a very bad economy, a vicious hit to display advertising, a sagging stock, layoffs whacking the already dispirited employee base, a lugubriously-paced deal to possibly merge with AOL, no Microsoft interest in bidding $31 a share for Yahoo again until hell freezes over and its regulatory-troubled search ad outsourcing deal with Google.

And, most of all, whither the management tenure of Yahoo’s Yang.

BoomTown is officially bummed.

In any case, here are the particulars to watch out for:

The Numbers: A consensus of analysts has expected Yahoo (YHOO) to have $1.37 billion in net revenue and income of nine cents per share for the three-month period, although some are predicting that Yahoo will miss those estimates by a penny.

More depressing, due to the very poor economic outlook and Yahoo’s reliance on display advertising over more recession-proof search ads, most expect Yahoo execs to give very weak guidance for the upcoming fourth quarter and perhaps beyond.

How low can it go? Think lower.

The Stock: Could Yahoo shares get hit any harder? Now hovering in the $12 range, the stock is down 45 percent for the year.

This gives one of the Internet’s most trafficked sites a market value of only about $18 billion.

And, yes, its shares could also drop even further, especially if Yahoo’s story is still sadder today and new ideas from its execs to fix things are not well received.

The Layoffs: As I said, more staff will be cut (and I expect other key and very disgusted employees to also soon be heading out the door on their own two feet too), numbering about 1,500. Many cuts will come in departments like HR and Finance.

But, sources said, these sorry souls have not been officially selected yet and true departures will not start immediately.

While most think Yahoo has long needed to tighten up its troop count, let’s be clear: You can’t cut your way to growth and the innovation needed to remake Yahoo.

The AOL Deal: What is truly striking is how long it is taking for this deal to be consummated. Oh, Yahoo and AOL are still jabbering away, sources said, which makes this dealmaking seems longer than this endless presidential election.

Would it be great if they announced it today? Yes, it would be, given both Yahoo and AOL owner Time Warner (TWX) desperately need a new story to spin to get the focus off their sorry current plots.

In fact, if these two were Warner Bros. television productions, Yahoo and AOL would be “Cold Case” and “Without a Trace.” Except, you know, those two shows are actual hits.

As I have written many times, Yahoo should only do the deal if it can get the much-faster-dwindling AOL on the cheap. And AOL? It should take cheap and be thankful for it.

A Microsoft Rebid: As much as journalists continue to misconstrue Microsoft CEO Steve Ballmer’s remarks last week about still being interested in a merger with Yahoo (he was speaking specifically of a search deal), Microsoft does not seem to be rushing back to the table.

I think Microsoft (MSFT) would if an AOL-Yahoo combination is ever struck, trying for that elusive search deal, of course.

But otherwise, I think Ballmer is content to let Yahoo swing in the wind a little longer. After all, his feelings were hurt by Yang’s rejection!

Of course, if he were sensible and not quite such an emotional exec, Ballmer would swoop in and grab the company at its low, low price, hip-check Google (GOOG) out of the search ad deal before the Justice Department does and look like a white knight to investors for doing it.

Which would be a first for the black-hatted Microsoft–sort of like brain-chewing Sylar turning out to be the good guy on this very odd third season of “Heroes.”

Then again, mutating the words of Woody Allen: The heart doesn’t want what it doesn’t want.

The Most Sacred Cow of All: Last year in his first quarterly earnings call as CEO, in a phrase he surely regrets uttering, Yang said he would undertake a 100-day hard look at Yahoo and that there were “no sacred cows.”

As it turned out, there were a lot of them, none of which were touched, most especially Yang himself.

Now, I like Yang personally a lot. More than a lot–he is a decent and thoughtful person, a true Web visionary and has a deeply-held heartfelt belief that he has the skills Yahoo needs to make it through this current period of crisis.

It is a crisis the company has seen before–things looked dicey back in the 2000 to 2002 period too, and Yang and others powered through to eventually pull Yahoo forward.

But that was then and this is now. The problems Yahoo faces are of a quantum level of difficulty, and Yang needs to clearly articulate once and for all why his investors and employees should put up with any more of his leadership.

In doing so, he can’t blame the economy or make excuses related to Microsoft’s takeover machinations or claim it is super-hard to turn around a company.

He has to give investors, employees, Wall Street, the media and consumers a better reason to stick with him than his heart bleeds purpler than anyone.

And that means a clear, bold, decisive and stone-cold plan to get Yahoo to a place of success and innovation it surely could be.

With its amazing products, huge traffic and still-great brand, anyone can see Yahoo can still be made into a really amazing company again.

And, if Yang can’t do that, he has to have to guts to find someone who can.

One of the more interesting developments of this election cycle has been the boom in viral online videos being used–from a plethora of political spoofs of the candidates to educational videos to people simply venting.

And those pushing citizens, especially young people, to register to vote have been using the boom in online video too.

Last week, BoomTown featured one effort by a passel of celebrities to snarkily get people to vote by telling them not to (but not really).

This week, actress Jessica Alba turns into a Home Shopping Network maniac by hawking “The Muzzler,” for those who don’t vote.

It’s a lot over the top–including featuring a pink muzzle on indestructible “Heroes” cheerleader Hayden Panettiere.

But it does get the point through like a sledge hammer that it is important to vote in the Nov. 4 election.

Alba has already posed for several shocking pictures for the group doing the video–Declare Yourself, a national nonpartisan group dedicated to getting young people to vote–including wearing a muzzle and being bound by electric tape.

So, whoever you plan to vote for, here is a list of deadlines to register to vote in the 50 states, with many being today and the rest of this week.

And, here’s the Muzzler video:

A lot more than settling a strike, I would posit.

A lot has been written about the writers’ strike in Hollywood, which is officially over after three acrimonious months with the overwhelming vote by the members of the Writers Guild of America to accept a contract it hammered out with the entertainment studios.

Writers will presumably be back at their keyboards today.

The toll? Hundreds of millions of dollars in lost revenues and no new episodes of “Heroes” (what will evil Sylar do now that his powers have returned?), all over how writers should be paid for content that appears online.

That there is precious little money being made online by anyone does not seem to have mattered, as the struggle metastasized into a symbolic battle over all the wrenching changes that digital technologies have made on the industry and are sure to make even more significantly in the future.

Writers, most of all, understand a dramatic narrative, and this one tells the tale of their work being digitized and downloaded without a lot of reward or control. It is a familiar story to them, of course, as technology after technology has not been kind to them.

In this three-year deal, victory was declared when the writers did get a percentage of the revenue from fees paid to stream their work on the Web.

Sorry to be a downer, but those fees will always and forever be peanuts, even if getting a percentage (rather than a residual) is seen as a win.

That’s because the big bucks in online content must come from advertising, which the writers will not grab a piece of at this point, if ever.

And if you think the creation of original online content is in its nascency, and it is, the robust business models around how to pay for it are even more stillborn.

Of course, there is money here and money there–some from items purchased, some from sponsorships, some from basic CPM economics.

But it is all very tentative and small now and advertisers are still not springing open their wallets with the kind of money they are used to spending on television.

And why should they? It is safe to advertise there, despite dwindling audience, wherein quality online content has so far shown itself to be very uncertain.

While there is an occasional errant hit of the most basic kind (Funny or Die’s “The Landlord” or similar material), there is no systemic or large-scale efforts to establish this industry of original online content in a way that is different from what has come before.

Of course, writers did hightail it up north to Silicon Valley during the strike to try to get some money to create new kinds of online-entertainment production companies.

But it felt like it was out of desperation, rather than a real commitment to change the system they were working in and to pioneer new forms of entertainment based around the Web medium.

The last time writers tried to marry venture capitalists, by the way, was in the last bubble and that was out of pure greed at the sight of the dot-commers all getting rich.

Well, greed did not work then and fear will not now. I would imagine writers will now abandon those efforts now that their old paychecks are back.

That’s too bad, because what’s needed is a whole new class of talent that has very little stake in the old one and who are seeking new ways of creating content, doing business and, most of all, envisioning the future.

Perhaps that is unspecific and not as real as the deal that was hammered out at the Luxe Hotel in the Brentwood section of Los Angeles between union reps and Disney’s Bob Iger and News Corp.’s Peter Chernin.

Now I have stayed at that hotel, in fact, for a conference, held nearby at the Getty Museum on a high hill overlooking Los Angeles. Called the Entertainment Gathering, it touched on the changing nature of the entertainment industry and also on the collision with the digital world it was facing.

Of course, there was a lot of talk about the innovation boom in Silicon Valley and what it meant for the entertainment industry.

At a break, one old entertainment mogul attending wanted to point out to me that Hollywood was like that once. He regaled me with stories of the mostly immigrant entrepreneurs who had left the certainty of the East Coast and had come to California and created a whole new business in the orange groves that once dominated the Los Angeles region.

“Can you imagine that?” he asked me, sweeping his hand over the vista.

Indeed, I could.

But that’s just the feeling I got when I read the always sharp Joseph Menn of the Los Angeles Times, who penned an interesting piece earlier this week about writers in Hollywood turning to venture capitalists as the strike drags on.

Wrote Menn: “At least seven groups, composed of members of the striking Writers Guild of America, are planning to form Internet-based businesses that, if successful, could create an alternative economic model to the one at the heart of the walkout, now in its seventh week.”

That includes meetings with Silicon Valley VCs like Jim Breyer of Accel Partners, whose investment in Facebook gives it insight into the creation of new audiences.

The hope for the–let’s just say it, shall we–unnatural pairing of tech VCs and Hollywood folks?

That the sour lemons being thrown between studios and writers–ironically over future Internet revenues–will actually yield delicious lemonade, spurring the creation of quality online programming using the Internet’s massive distribution system that could also make lots and lots of money.

“Could” is obviously the operative word here, because–as we have noted many times in this column–very little original content created on the Web has had any true payoff yet.

Um, well, none, actually. (Save porn, which is an almost perfect content format for the Web.)

To be fair, there have been promising signs.

Ex-Yahoo exec and Hollywood player Lloyd Braun struck a deal with PepsiCo to pay for and create online content.

MySpace has been backing a range of online-only shows made by Hollywood types (although none has shown strongly increasing popularity and even seem to display worrisome declines in viewership, despite the justified potential touted by creators).

Of course, there’s the high-profile Sequoia Capital-backed and Will Ferrell-fronted FunnyorDie.com, as well as MyDamnChannel.com, from former MTV executive Rob Barnett.

And Viacom agreed this summer to create a new online entertainment studio in a 50-50 split with the creators of the popular “South Park” TV program.

Finally, Creative Artists Agency, which is the biggest talent agency in Hollywood, is apparently working with Silicon Valley VC firm Draper Fisher Jurvetson to raise up to $200 million to invest in the digital entertainment sector, even as other such firms as UTA and William Morris are making similar moves.

While that is a very little amount of money considering the billions of dollars that slosh around Silicon Valley to fund things like dopey widgets and yet another movie-comparison site, it is still a start.

The presumable goal is that by creating and distributing content for the Web in a lower-cost way, many kinds of revenues could be garnered via everything from advertising to getting back investments by selling the online material to television and the movies.

That sounds like a plan, except for the fact that the current state of advertising innovation related to Web videos is quite nascent, even pre-fetal.

While a lot of companies are focusing on this and advertisers seem willing to move in the direction of more online ad spending, it will simply be a long time before these investments pay off.

Which is just not part of the no-risk-and-all-reward mentality of most players in Hollywood, who wouldn’t know a start-up unless it took their prime table at the Ivy.

In all seriousness, it seems unlikely that the high cost of production now in place in the entertainment industry would in any way lend itself to the critical need for that kind of massive shift in economics required to make online content pay off now.

Currently, studios still only grudgingly want to consider sharing ownership of content, and the talent seems even less willing to take the burden of risk required onto its shoulders.

Still, I admire all the efforts on the part of writers to not just strike, but strike out from their current comfort zone and move into the future, where online entertainment production and distribution seems obviously inevitable.

The problem is that it might take a longer while than those creators have patience for and they will prematurely abandon their efforts and return to propping up a system that is destined for, while not oblivion, then certain diminution.

So what’s needed–as in all marriages–is a crazy leap of faith, like this one from “Heroes” Peter Petrelli on NBC.

I am definitely no expert on this topic, except to say that the problem is that the delta between falling flat and succeeding is frighteningly close.

In other words, I Has No Idea what to do.