Incredibly, this is the seventh year of the D: All Things Digital conference.

We feel very lucky to get here, especially in the midst of what our own site’s Digital Daily scribe, John Paczkowski, has so perfectly dubbed the “econalypse.”

Ironically, Walt Mossberg and I planned to launch the very first conference in the middle of the last major downturn for tech, in 2001. But, in the carnage of the Web 1.0 meltdown, we actually held off for two years, with our first D gathering taking place in 2003.

It’s been a real winning streak since then for D, due in large part to our great speakers–such as Microsoft (MSFT) icon Bill Gates and Apple (AAPL) legend Steve Jobs.

Both have been onstage many times over the years, including a historic interview the pair of tech titans did together in 2007 at D5.

Other amazing speakers have included: Howard Stringer of Sony (SNE), Barry Diller of InterActiveCorp (IACI), legendary director George Lucas, Time Warner (TWX) CEO Jeff Bewkes, Jeff Bezos of Amazon (AMZN), former eBay (EBAY) CEO Meg Whitman, News Corp. (NWS) head Rupert Murdoch, Microsoft head Steve Ballmer, Walt Disney (DIS) honcho Bob Iger, Bobby Kotick of Activision Blizzard (ATVI), CBS (CBS) CEO Les Moonves, Democratic and Republican pols like former Vice President Al Gore and Sen. John McCain, all the leadership of Google (GOOG) and many, many more.

We have had a lot of great moments onstage with all these tech and media players over the years, to be sure, with interviews ranging from the funny to the sublime to the truly disastrous.

But, like the digital industry and the innovation our conference focuses on, we also like to lean forward to try to figure out what the Next Big Thing is around the corner, whether it comes from Silicon Valley or not.

That’s why we’re kicking off our conference on May 26 with two of the founders of Twitter–Biz Stone and Evan Williams–who are riding high on tech’s latest hot thing, which might turn out to be either a rocket ship or a shooting star.

They’ll be followed up over the next two days by a plethora of interesting players, from the leaders of several major mobile companies to content execs hit hard by fast-moving digital forces to a new Internet leader like Yahoo (YHOO) CEO Carol Bartz, who is trying to turn around one of the Web’s great icons from its more recent lackluster path.

And, as we always do, we will be featuring a spate of demos too, trying to see if we can unearth that next next thing.

In the past, the D stage has seen the debut of start-up products like Sling Media’s Slingbox, Aliph’s Jawbone and Pure Digital’s Flip, all of which have gone onto glory. And also some, like Palm’s Foleo, which did not.

While not everyone can attend D, our crack staff is committed to bringing all the action from this year’s conference to readers of the All Things Digital site via up-to-the-minute blogs, photos, videos, tweets, digs and more. We’ll also, as soon as we can, post the videos of each of the onstage sessions, in their entirety.

Until it all kicks off, here is the list of speakers, below, in alphabetical order, who will be appearing at 2009’s D7 conference:

Irving Azoff | CEO of Ticketmaster Entertainment (TKTM)

Mitchell Baker | Chairman of Mozilla

Steve Ballmer | CEO of Microsoft

Carol Bartz | CEO of Yahoo

Mark Cuban | Chairman of HDNet and Owner of the Dallas Mavericks, Landmark Theaters and Magnolia Pictures

Eve Ensler | Playwright and Founder of V-Day

Arianna Huffington | Editor-in-Chief of the Huffington Post

Olli-Pekka Kallasvuo | CEO of Nokia (NOK)

Mike Lazaridis | Co-CEO of Research In Motion (RIMM)

John Lilly | CEO of Mozilla

John Malone | Chairman of Liberty Media Corporation (LCAPA)

Roger McNamee | Partner, Elevation Partners

Jon Miller | Chief Digital Officer of News Corp.

Jon Rubinstein | Executive Chairman, Palm (PALM)

Randall Stephenson | CEO of AT&T (T)

Biz Stone | Co-founder of Twitter

Owen Van Natta | CEO of MySpace

Katharine Weymouth | Publisher of the Washington Post (WPO)

Evan Williams | Co-founder and CEO of Twitter

Jeff Zucker | CEO of NBC Universal (GE)

Here’s a video of former eBay CEO Meg Whitman talking to Matt Lauer on the “Today” show this morning about her nascent campaign to be governor of California as the Republican candidate.

Whitman, who was a favorite of failed Presidential nominee Sen. John McCain, seems to have perfected the art of saying exactly nothing, even after Lauer asked her if she was nuts to run the “arguably ungovernable”–referencing a writer for the Sacramento Bee–California.

“Running a business is different from running a state,” said Lauer.

Whitman’s answer: Prioritization!

Another former eBay (EBAY) exec, who worked for Whitman, Steve Westly, is also being mentioned for the governor’s race to replace current Republican Governor Arnold Schwarzenegger, on the Democratic side.

I say we have an auction to determine which eBay exec gets the nod.

Until then, here’s the “Today” show video from the Meg2010Campaign site on YouTube:

[UPDATED: H-P exec Todd Bradley has been a public company CEO, which I reflected below correctly.]

With Yahoo board Chairman Roy Bostock reportedly assuring investors and others that the company will have a CEO in place by the end of the year, it seems prudent for BoomTown to initiate an official Yahoo CEO Countdown.

After all, this column had a 100-Day No-Sacred-Cows Vision Quest to mark the time that Jerry Yang said he needed to give Yahoo a top-to-bottom look-see when he took over last summer as CEO.

Yang announced he was stepping down on Nov. 17, prompting the search for someone to lead Yahoo (YHOO) to the promised land where BoomTown countdowns are illegal.

But that’s not today, so here’s the 26-days-to-go update:

It looks like Yahoo has almost no chance to nab a top candidate, News Corp. (NWS) COO Peter Chernin. While Yang made nice and Bostock quickly lobbed in a call to get the well-known exec to come in and talk, several sources said Chernin declined even that.

Of course, moguls like Chernin are pros at not interviewing–one media player schooled me that you apparently never show interest in a job and only take it if a full offer is made, because if you don’t get it after chit-chatting, you look like a loser.

But I don’t think it is a slick feint on his part, even though Chernin is now engaged in contract renewal negotiations at News Corp. (which owns this Web site).

Consider: If you were Chernin, would you want to trade your powerful, well-paid, glamorous job in Hollywood and New York for what will surely be a slog of a job in Sunnyvale, and in a cubicle?

And Chernin has told many he is not interested in doing the job, although News Corp. would still love to do some sort of deal to combine its online assets, like MySpace, with Yahoo’s, as it almost did many times.

While Chernin did just take delivery on a Tesla, showing some clear geekiness, and he would be an exciting get for Yahoo, it’s the longest of shots.

The same is true for some other names that have been floated (by me!).

But several of the people are on the Yahoo board’s list too. And while things can change, it is more unlikely any of them will be the pick.

That includes former Yahoo COO Dan Rosensweig, who has a good life now as a media investor; former eBay exec and OpenTable CEO Jeff Jordan, who told his investors he does not want to be in the running and was sticking with the start-up’s IPO plans–if and when the economy recovers (although Yahoo could buy OpenTable and, thus, Jordan); former eBay (EBAY) CEO Meg Whitman, who could be running for governor of California; and former AOL CEO Jon Miller, who is not secretly buying Yahoo, but who could not be its leader anyway, since he is bound by a Time Warner (TWX) noncompete agreement until the end of March.

Another sticking point: The Yahoo board has limited the pool by a list of six criteria that it has drawn up, with the No. 1 being a CEO candidate has to have public company CEO experience.

If enforced, that nixes some folks, like Google (GOOG) exec Tim Armstrong. In addition, Yahoo President Sue Decker getting the nod is even more unlikely, for that and other reasons, according to many.

From my lists, that leaves DoubleClick head David Rosenblatt (his company is now owned by Google); Demand Media’s Richard Rosenblatt; former Viacom (VIA) head Tom Freston; former CNET CEO Shelby Bonnie; Hewlett-Packard (HPQ) exec Todd Bradley; and Juniper Networks (JNPR) CEO Kevin Johnson, who was the Microsoft exec who was key in the Yahoo takeover attempt there.

All have reasons not to either want or be able to take the Yahoo CEO job, so that means there could be a dark horse candidate. (I am now drawing up yet another list of qualified public CEO tech and media execs).

Here’s one: Yesterday, after it was announced he was stepping down from Microsoft (MSFT) in the wake of its hire of former Yahoo tech star Qi Lu as its online leader, I noted that I liked Brian McAndrews for the job.

Plus, the former CEO of aQuantive, which Microsoft bought for $6 billion last year, would be a delicious irony. But those who have talked to him told me McAndrews–who did want the digital head job at Microsoft and was left hanging by the software giant’s CEO Steve Ballmer–seems intent on taking time off now.

Alternatively, one of the two Yahoo board members, Maggie Wilderotter or John Chapple, both have the public company CEO checked off.

Personally, I am betting on one of them as CEO, although I believe it would be better if Yahoo picked a fresh outside choice.

So do a lot of execs remaining at Yahoo, most of whom visibly roll their eyes at the idea of a board member taking over, considering the record of the directors so far in guiding Yahoo’s fortunes.

That’s why the board–which definitely has not distinguished itself by any criteria so far in Yahoo’s long fall from grace–should try to get it right this time, as Yahoo can’t take any more of the way it has been running the show so far.

And, no surprise, he is the No. 1 choice of most inside and outside Yahoo (YHOO) in the wake of the news late yesterday that current CEO and Co-Founder Jerry Yang is stepping down.

And why not? Chernin has the right resume: Experienced at running large and complex organizations; savvier than most in media about the Internet; able to make the kinds of dramatic decisions needed; and, perhaps best of all, signaling–via the Los Angeles Times–just this past week that he was open to leaving the powerful media and entertainment conglomerate for something new.

Well, Yahoo would certainly be new for Chernin, in terms of a corporate cleanup challenge, especially compared to figuring out how to make bank on plush toys from “The Simpsons.”

And, while the risks are many, if Chernin (pictured here) managed to turn around Yahoo, he could make a huge fortune too, given Yahoo shares have languished of late, much in the same way they did when former CEO Terry Semel came to Yahoo from Hollywood in 2001.

But it’s not altogether clear whether Chernin would actually leave his powerful perch at News Corp. (NWS)–which owns Dow Jones and owns this Web site. He has been ensconced there for a dozen years, building a huge reputation as a sharp exec (No, Peter, I am not kissing up, as I think Yahoo would wear even you down very, very quickly).

That’s even though many note he is not likely to take over as CEO from its iconic leader, Rupert Murdoch. The media mogul is widely expected to favor one of his own children to lead News Corp. next.

And the 57-year-old Chernin already makes close to $30 million in his current job, which is definitely challenging.

And, although Chernin has been involved in the News Corp.-owned MySpace and has had success backing the Hulu online video site, it is not nearly as hard as the five-year turnaround quagmire (plus no fabulous media mogul perks either) that Yahoo could turn out to be.

In addition, privately to other News Corp. execs, Chernin has regularly pooh-poohed a move to a digital company, even though he is always on the short list for a lot of big Internet jobs–such as the long-unfilled post as digital head at Microsoft (MSFT) more recently.

So, who else to take over from Yang, who will return to his job as Chief Yahoo after stepping down from the company as soon a search for a replacement CEO is successful?

Well, here is BoomTown’s own shortish list, based on asking a wide range of people inside and outside Yahoo, all of whom are important digital players in their own right.

INSIDE YAHOO

Sue Decker:

The current President of Yahoo is certainly being “considered” for the job, which is a polite term for not really being considered at all. While Decker is an intelligent and thoughtful exec, like a politician with a record, she has had her hand on the operating tiller at Yahoo for too long not to get deservedly blamed for its current situation.

In addition, she is radioactive to big investors, who have told the Yahoo board in no uncertain terms that she is a nonstarter.

Maggie Wilderotter:

The former Microsoft exec, who has also been a public company CEO, is an interesting idea floated by some, who think the Yahoo board might turn to one of its own directors, as a short-term solution to stabilize Yahoo.

Wilderotter has been much focused, said several Yahoo execs, on cost-cutting at Yahoo and certainly is not as tarnished, being a more current board member. But she is a largely unknown quantity in the Internet space and, most importantly, at Yahoo.

John Chapple:

The former CEO of Nextel is one of the two board members (former media Frank Biondi Jr. is the other) recently picked by Carl Icahn, when the activist shareholder was admitted on the board as part of the proxy fight settlement.

Chapple has, sources said, been conducting chats with Yahoo execs lately, perhaps as a way to get a lay of the land. If he got the job, it would be clear Icahn had won his Pyrrhic victory (and personal financial defeat) against Yang.

OUTSIDE YAHOO

Dan Rosensweig:

The very funny, but brash, former Yahoo COO is definitely a favorite within Yahoo’s ranks, except for those who don’t like him. But it’s clear Rosensweig does know and love Yahoo, is close to Yang and, ironically, enjoys a tight relationship with Microsoft CEO Steve Ballmer, who also wanted him for the digital head job.

Also, Rosensweig, who does have operating chops, has gotten some much needed time away from Yahoo, as a partner at the tony media investment firm, the Quadrangle Group.

Meg Whitman:

Another dreamy CEO choice, except she has already been a big company CEO at eBay (EBAY), has proved her mettle in building it to a powerhouse–despite the online auction site’s currently harder times–and has the giant fortune to prove it.

And, oh yes, she is likely to be using that pile of cash to run for governor of California, on the Republican ticket.

Jon Miller/Ross Levinsohn:

The Bobbsey Twins of the Internet, the pair are now having a very good time running their own investment company, the Velocity Group.

But, aside from some questioning whether he can make the quick decisions needed at Yahoo, Miller (pictured here on the right), the former head of AOL, does not want to leave his New York home and cannot take any job anyway until his noncompete with Time Warner (TWX) runs out in March.

And former Fox Interactive Media head Levinsohn likes Los Angeles, and probably is too fast a personality for Yahoo (his going there would be a shock to its system, but would be endlessly entertaining to me personally).

Tim Armstrong:

The top ad exec at Google (GOOG) certainly is an interesting idea, although has little of the product experience needed to run Yahoo. But he is a well-respected advertising figure–where Yahoo needs to shine–and could do well with a lot of strong execs under him.

He is also not on a CEO path at Google–paging, Larry Page!–and could be interested in proving he could run a company on his own.

Kevin Johnson:

The former Microsoft exec was supposed to be running Yahoo, if he and Ballmer pulled off their takeover attempt earlier this year. They did not, and Johnson then left Microsoft to run Juniper Networks (JNPR) in Silicon Valley, right up the road from Yahoo, in fact.

But Johnson is likely subject to a noncompete by Microsoft and a strong contract at Juniper too. Still, a very sharp exec, he definitely has the operating, political, technological and digital skills to take on Yahoo. Also, ironically, he and Yang really get along well and like each other, despite the takeover battle.

Of course, there are a lot of other ideas: Disney (DIS) online exec Steve Wadsworth; the outside-the-box choice of former Procter & Gamble (PG) marketing wizard Jim Stengel; Microsoft digital exec Yusuf Mehdi; CBS (CBS) digital head Quincy Smith (whose hyperactive dealmaking would likely lead to a mutant merger between CBS and Yahoo); and former Cisco (CSCO) and current Joost CEO Mike Volpi.

Please post suggestions below or, better yet, send tips to me at here.

Please see this disclosure related to me and Google.

Yahoo CEO Jerry Yang will step down from his job as CEO as soon as the board finds a replacement for him, in what sources close to the situation call a joint decision by him and the company’s directors.

Yahoo (YHOO) will announce the move within the next hour. [UPDATED: Yahoo confirms the move in its official press release.]

But, in a memo to Yahoo’s employees, obtained by BoomTown, Yang confirmed the pending departure, writing: “…we believe the time is now right to transition to a new ceo who can take the company to the next level.”

Yahoo has hired Heidrick & Struggles, the well-known executive search firm, to evaluate candidates, both internally and externally.

After a replacement is found, which the company hopes will be quickly, sources said, Yang will resume his former title as Chief Yahoo and will also remain on the Yahoo board.

While did-he-walk-or-was-he-pushed speculation will no doubt run rampant, sources said Yang already has and will play an important role in the search for his replacement.

Sources close to the board expect the choice will end up being an outsider and is not likely to be current Yahoo President Sue Decker, although she is being considered for the job.

But both she and Yang have been closely affiliated with each other as the company has struggled to right itself after a tumultuous year and its stock price has plummeted.

Yahoo shares closed today at $10.63 after trading at historic lows for a while and giving the company a valuation of only $14.7 billion.

While Yahoo’s board has some execs in mind to become CEO, obvious candidates include News Corp. (NWS) COO Peter Chernin, as well as former AOL head Jon Miller, former eBay (EBAY) CEO Meg Whitman, Google (GOOG) ad exec Tim Armstrong, former Fox Interactive exec Ross Levinsohn and former Yahoo COO Dan Rosensweig (who is currently with the Quadrangle Group).

BoomTown would also throw in former Microsoft top exec Kevin Johnson, now CEO of Juniper Networks (JNPR), and who led the software giant’s abandoned takeover bid against Yahoo earlier this year.

According to sources, both Yang and the board have been discussing the move for months, although Yang has been saying quite explicitly in public that he was going to stay in place to see through the many changes he has made in his 16-month tenure.

In a recent interview with me, in fact, Yang said about his determination to lead:

“In this uncertain environment, I think I am absolutely the right person. Times like this require a leader who really understands this company and its customers, and I think I do. The world is a different place today than even a month ago and I think I am the best person to guide Yahoo through this volatile time.”

In fact, it has always been a volatile time for Yang at Yahoo. He took over suddenly last June from former CEO Terry Semel, whose departure also came after Yahoo’s struggles became increasingly apparent.

Things only got worse for Yang, due to both his own and previous management missteps and also massive external forces, including a hostile takeover attempt by Microsoft (MSFT), which was soon followed by a proxy fight by activist shareholder Carl Icahn.

The Microsoft bid–which was $31 a share–was abandoned, and Icahn dropped the proxy fight, with Icahn joining the board with two other directors he had handpicked.

And while Microsoft has been interested in a deal related to Yahoo’s search business, its CEO, Steve Ballmer, has categorically ruled out a renewed bid.

Yahoo also saw its search business decline in the face of dominance in the market by Google (GOOG), which had ironically started its then-nascent business on Yahoo as its search partner.

Worse still, Yahoo’s strong graphical ad business has suffered badly in the midst of the current economic meltdown.

There has also been an exodus of major executives over the last year, along with recently announced layoffs of 10 percent of the company, which are set to take place Dec. 10.

In addition, Yahoo’s controversial search ad deal with Google collapsed and its talks to merge with Time Warner (TWX) online unit AOL have dragged on.

With all this, sources close to the company said that both Yang and the board felt the company needed another leader to take it to the next level and complete the turnaround efforts Yang has been trying to pull off.

“It was time for someone else,” said one source close to the board.

More, obviously, to come…

Please see this disclosure related to me and Google.

In advance of tomorrow’s elections, here’s a pair of videos of the two presidential candidates, Republican Sen. John McCain and Democratic Sen. Barack Obama, talking about tech.

While Obama has many more supporters in the tech and Internet sectors in terms of numbers, including Google (GOOG) CEO Eric Schmidt, McCain’s include Cisco (CSCO) CEO John Chambers, former eBay (EBAY) CEO Meg Whitman and former Hewlett-Packard (HP) head Carly Fiorina.

And while tech is not exactly issue No. 1 with either of them, here is McCain talking about it in the entire interview he did at the fifth D: All Things Digital conference in 2007 (he also discusses Iraq and other topics in the interview) and a new, much shorter three-minute video just posted by Obama on tech policy:

As has been copiously reported here and all over, Yahoo and AOL have been engaged in never-ending talks about a possible deal to merge their flagging Internet businesses.

Now, sources tell me, the circle of executives at both companies interfacing with each other has been widened, for purposes of due diligence.

That chit-chatting includes Yahoo CEO Jerry Yang, who has been in New York several times recently [UPDATE: But not yesterday, in a story I had previously linked to here]–where AOL parent, Time Warner, is located–to meet once with its CEO, Jeff Bewkes, and see if they can actually complete the merger.

Now, all this frantic activity does not mean a deal will necessarily be struck. In fact, in typical Yahoo style, it is going very slowly and that is never a good thing in dealmaking.

But it is this kind of ramped-up blabbery that has many at both companies predicting–hoping, really–that a deal will go through, sooner or later, as soon as Time Warner and Yahoo can agree on a price.

Or, more precisely, a percentage, since Yahoo’s stock price has been falling like a particularly sharp knife of late.

Sources said Yahoo does not want Time Warner (TWX) to have any more than 25 percent of the new company in a trade for AOL’s assets–although that figure would be slightly more if the media giant throws in some of that “Harry Potter”-generated cash into the deal kitty.

Yahoo (YHOO) management, sources said, also think its assets are of significantly better quality than AOL’s, and it still has that powerful–although declining–share in the lucrative search market.

Thus, it does not want to pay the $8 to $10 billion price Time Warner wants, and it should not either. (Here is a good analysis on the price issue by Silicon Alley Insider’s Henry Blodget.)

But Yahoo shares closed yesterday at a troubling $14.58, down 73 cents, or almost five percent.

That means its market valuation also declined by many billion dollars very quickly. It is now at $20.2 billion.

These profound stock drops, said several sources, could spur Yahoo to act before it gets even worse, which is why talks have been more frequent in recent weeks.

While not the best state of mind, panic is always a good motivator, and both companies are surely desperate to turbocharge themselves in the face of tough competition and avoidable management mishaps in recent years.

The hope? That together the pair can do better than they have separately–by combining their advertising, content and communications assets, which are among the largest in the world.

In addition, the “new” Yahoo would be able to make massive cost cuts, including layoffs, under the cover of integration and starting off with a clean slate.

So who would emerge more powerful in a new set-up–AOL or Yahoo?

Here’s a short cheat list:

Content:

AOL and Yahoo have a similar range of content assets, with big sites in all the classic categories, like news, financial, sports and lifestyles. Yahoo’s content head is Scott Moore, while AOL’s is Bill Wilson (both pictured here, left to right).

As I wrote yesterday, I expect that the more dominant Yahoo will rule, slashing and burning most of the AOL-branded properties, keeping only interesting newer brands like sports blog FanHouse, celeb blog TMZ and the Engadget, Tuaw and JoyStiq tech blogs.

And while former Microsoftie Moore is the likely head of this behemoth, don’t count on the very adept Wilson, who is known as a skilled corporate player at AOL, to stick around without a big role in this arena.

Communications:

Again, advantage Yahoo, which has bigger calendaring, email and instant messaging assets, an area once overwhelmingly dominated by AOL. That was then, of course.

Still, AOL’s communications tools are used by a huge audience worldwide and the pair together would be a powerhouse. So much so, in fact, that this might be the one major regulatory hurdle any deal would face.

Advertising:

Again, Yahoo would probably dominate, having just hired well-known former Microsoft exec Joanne Bradford to head up U.S. advertising sales. AOL’s top ad exec is Lynda Clarizio, a former lawyer who is considered dogged but much less experienced than Bradford. (Both are pictured here, right to left.)

And, Yahoo does have its search ad business, however weakening, and a stronger graphical ad business, even if the sector will be most under siege in the current down economy.

Plus, AOL’s Advertising.com, while a major ad network, is more of a business subject to bruising competition and squeezed margins.

Community:

Tapan Bhat (pictured here) now rules community at Yahoo, as well as its homepage, having just inherited it from the departing Brad Garlinghouse.

But AOL has a savvy and voluble exec in Joanna Shields, who came recently via its Bebo social-networking acquisition. While AOL woefully overpaid for Bebo and got played into thinking that other bidders were more interested than they actually were, it was Shields (pictured here) who essentially did that playing.

Sign her up for a top exec role in the combined company pronto!

In all seriousness, there is room for both in the newco, as both AOL and Yahoo seriously bite in the social-networking space. They will surely need a lot more than Bhat and Shields if they want to become true players in Web 2.0’s hottest and probably most important trend.

Engineering:

Yahoo. I do not need to explain this, do I?

Okay: AOL has always been incompetent in the technical arena, since its beginning days, compared with Silicon Valley companies like Yahoo.

All yours, Ash Patel!

Management:

Now, it is here that it gets interesting.

Most feel the push by Yang to do an AOL deal–and make no mistake, it is being pushed by him most of all–is due to increased pressure from his board, as well as major investors, who have had just about enough of his leadership.

“There is no way Jerry stays on as CEO in a newco,” said one source about Yang (pictured here). “He’ll be kicked upstairs as chairman, and I will think [President Sue] Decker will also have to go eventually, since there will be a lot of resistance if she is named CEO.”

But, said other sources, these major management changes will not happen immediately, if at all, as it is too distracting in the wake of a deal and ruins the positive “story” that both companies will surely want to spin.

And spin they will! (Go, Tricia! Go, Jill!)

And while he has a reputation for sharkish political skills, especially compared to Yahoo’s very diplomatic U.S. head, Hilary Schneider, expect AOL President Ron Grant to be an important part of the transition, since he is good–almost too good–at cutting costs.

Most expect his boss, AOL CEO Randy Falco, not to be part of the new company, thereby separating him and Grant, who are nicknamed “Smithers and Burns” at AOL, after “The Simpsons” creepy duo.

Most likely, there will be a search for a top-level CEO to take over the combined company–someone of the stature of New Corp.’s No. 2 Peter Chernin or eBay’s former leader Meg Whitman (except now, she is apparently Sen. John McCain’s pick for Treasury Secretary, if the Republican Presidential candidate were to win the election).

“If this has any chance of working out, the board has to push restart on the leadership,” said one person close to the situation, who notes that this deal is Yang’s last chance to truly impact the future of the company he co-founded and preserve its legacy. “Everyone gets that, even Jerry.”

But I think the idea that Yang would leave if there were to be a merger of Yahoo with AOL is wishful thinking on the part of his critics.

He appears tome to be very committed to seeing his vision of turning around Yahoo through.

And those who have counted him out always seem to be the ones who have been typically wrong, such as Microsoft CEO Steve Ballmer and shareholder activist Carl Icahn.

Because, for all the turmoil at Yahoo, it’s Yang still calling the shots.

BoomTown was all busy trying to think of execs to replace Yahoo CEO Jerry Yang, as pressure mounts on him to right the troubled Internet company.

But now, Yang’s position feels safer than ever and it’s his nemesis–Microsoft– that needs a new leader for its long-stumbling online services business.

Microsoft (MSFT) was already cracking, according to sources, and had a wish list of internal and external candidates that CEO Steve Ballmer is now considering.

Ballmer noted in his memo to company employees yesterday the departure of Platforms and Services President Kevin Johnson and the reorganization of that massive division, that he would “create a new senior lead position and will conduct a search that will span internal and external candidates.”

Many think, given the turbulence, that Ballmer will pick a trusted internal Microsoft veteran, especially since he probably should move quickly.

Sources said Brian McAndrews (pictured here), who came to Microsoft via the $6 billion aQuantive acquisition last year, is the leading insider for the job.

SVP Satya Nadella, who will run search, MSN and ad platform engineering efforts in a new reorg, is less likely.

But Strategic Partnerships Senior Vice President Yusuf Mehdi, a longtime exec who has previously led online businesses at Microsoft, is also in the mix, the possible dark horse due to his past experience. As strategy “wingman” to Johnson, he might want a more operational job again now that Johnson is gone. Mehdi is also well liked in Silicon Valley and in media circles.

More interesting perhaps is one of the top outside candidates on the list, former AOL head Jon Miller (pictured here), who is poised to be added to the–wait for it–Yahoo (YHOO) board, as part of its recent proxy fight settlement activist investor Carl Icahn.

Miller, who was bounced out of AOL unfairly several years ago, is now running an investment firm with former Fox Interactive Media head Ross Levinsohn.

(And, adding to the hijinks, Levinsohn was on Microsoft’s alternate board in its own abandoned proxy fight against Yahoo.)

Other execs on the list are also more experienced in the Web space, such as former CNET head Shelby Bonnie, who is currently working on a start up called PolticialBase.

Microsoft sources said someone like former Yahoo COO Dan Rosensweig–now in private equity at the Quadrangle Group–is also the type of exec the company is looking for. Of course, he is deeply loyal to Yahoo (and his name has also been bandied about as a possible future Yahoo CEO too).

Of course, the company’s fondest desire is probably to get an even bigger Web or media exec like News Corp.’s (NWS) Peter Chernin or former eBay (EBAY) head Meg Whitman. (News Corp. is the owner of Dow Jones and of this Web site.)

Having been around when Microsoft first dipped its toe in Internet waters back in the mid-1990s, I’m sorry to say that whoever the software giant picks has small shoes to fill.

After years and years of losses, while Google (GOOG) and Yahoo made bank and grabbed share, Microsoft has not.

In its recent quarterly report, for example, while revenues for the online business rose 24 percent to $838 million, losses from Platforms and Services doubled to $488 million.

Ouch! That’s gotta hurt.

Because of the continued inertia, Johnson’s large unit–which includes the powerful Windows division, as well as the online services business–will be reorganized into two parts.

The Windows and Windows Live online service will be one part and other will be made up of online advertising, search and MSN.

That division needs to bulk up the software giant’s efforts in the Web space, especially in the online advertising arena where Google now rules.

In an attempt to make an end run around the search behemoth, Microsoft tried to buy Yahoo, the No. 2 player in the search and search-advertising space, and then tried to grab only its search business–efforts that have so far yielded nothing.

In any case, this reorg of a previous reorg (Ballmer united the Windows and online services business three years ago) is a clear signal of the unrest and even a bit of chaos at Microsoft resulting from the Yahoo battle.

There is definitely a lot of ire aimed directly at Johnson (pictured here) as the key executive in charge of the effort besides Ballmer, because of his failure to make a deal.

Worse, the bid forced Yahoo into the arms of Microsoft archrival Google, via a controversial search-ad outsourcing deal.

Microsoft must obviously do something.

Its market share in the search market, for example, has persistently stayed under 10 percent, despite a range of efforts to differentiate itself.

Re-energizing Microsoft’s Web efforts is most definitely a thankless job.

And whether replacing Johnson and bringing in a new leader who can push the reset button will work this time is unclear, as are many things having to do with Microsoft’s Internet strategy right now.

Please see this disclosure related to me and Google.

And then the New York Times’s Joe Nocera called for it in an eviscerating column this past weekend that articulated what an increasing number of people in Silicon Valley and Wall Street and, more importantly, within Yahoo have been thinking of late.

And that it is: Whether Yahoo CEO Jerry Yang (pictured here at D6) should step down in favor of another top executive to lead the troubled Internet company into the next era.

It’s the obvious question, of course, to ask whether the co-founder of Yahoo has what it takes to manage the company through what will doubtlessly be a very difficult year.

(Speaking of that, see this disturbing hiring freeze post by Peter Kafka of Silicon Alley Insider, which might spell trouble ahead at Yahoo.)

BoomTown asked Yang specifically why he was the right leader for Yahoo going forward at our sixth D: All Things Digital conference recently and–guess what?–he did not really have an answer to the question.

Let me for him, then: The main reason he is the right leader is due to his history, his obvious love for Yahoo and its employees and that his heart, as Yang said in his one and only passionate moment onstage, does bleed Yahoo purple.

Unfortunately, as important and touching as those things are, it’s probably not enough for the rough road ahead for Yahoo.

As Yahoo continues to be in limbo, pressure is sure to mount heavily on Yang, and it is not a stretch to imagine he will not remain in the top job at the troubled company for the long term.

So who would be good to replace him?

The list is a long one and could include execs like Tim Armstrong of Google, Kevin Johnson of Microsoft and any number of media and advertising execs.

But I have six candidates I like, so here’s my short list, in no particular order (and remember, the last time I made one for the job of the No. 2 leader for Facebook, its current COO Sheryl Sandberg was high on my list).

Sue Decker

Yahoo President Sue Decker (pictured here) is the obvious choice for Yang to hand over the reins to.

But should he?

Here are the positives: Decker is smart, articulate, financially savvy and a well-known quantity within Yahoo.

And, like Yang, she has worked her heart out there for many years.

But there are some significant negatives, starting with the tarnish of the whole Microsoft takeover saga, which most think both she and Yang have handled badly.

After so much confusion and missed opportunities, it is not clear if the troops at Yahoo or, perhaps more importantly, Wall Street and the company’s shareholders will give Decker the kind of running room she needs.

In addition, again and again, many within Yahoo talk about Decker’s lack of product feel and overall vision that will be required to truly give Yahoo the kick in the pants it so sorely needs.

Plus, Decker has been around Yahoo a long time and is clearly part of the leadership group that has allowed the company to languish for so long.

Nonetheless, Decker clearly remains the front-runner and might blossom if she had full control over Yahoo, as Bob Iger of Disney (DIS) did there, for example.

Meg Whitman

While many do not know it, Meg Whitman (pictured here) was almost the CEO of Yahoo once, but lost the chance due to a botched merger attempt between Yahoo and eBay (EBAY) back in Web 1.0.

Think of the might-have-beens of that union.

There is no doubt Whitman is an Internet exec star, despite the fact that she herself admits having done as much as she could at eBay after a decade when she recently stepped down as CEO there.

But that kind of candor is exactly what is most impressive about Whitman, who is straight-talking, and very, very tough, despite a sunny-seeming exterior.

She has certainly impressed Yahoos already, having appeared in the not-too-distant past at a sales conference, where she blew away the crowd with her grasp of Yahoo’s business.

Here’s the problem: Most expect the Republican Whitman to make her next move in the California political arena. Can you say Governor Whitman? Senator Whitman?

And also, she’s about as rich as you can be and any monetary attraction to reviving Yahoo would probably be negligible.

Peter Chernin

Let’s be clear–we’re not putting Peter Chernin (pictured here and BoomTown’s kind-of boss) in this list to kiss up to him.

While News Corp. (NWS), where Chernin is No. 2, is the owner of this site, I and many others consider him (along with Disney’s Iger) to be one of the sharpest and most versatile “old” media execs to get the Web.

At the very least, he does not seem scared senseless by it. (Which is a very big deal.)

And while he probably presides over one of the choicest media conglomerates out there, CEO Rupert Murdoch shows no signs of retiring, and his son, James Murdoch, is clearly training in the wings.

A move to Yahoo would be a bold one for someone like Chernin, who clearly has the tough management chops to run the place and give it direction to become a true partner to Hollywood in the way the Spock clones of Google never ever will be able to.

Actually, given he has a foot in both old and new media (Hulu.com, MySpace), he is BoomTown’s No. 1 pick.

Marc Andreessen

I had included Marc Andreessen (pictured here) in my list as a possible No. 2 exec at Facebook as a bit of a lark, just to remind folks that vision matters.

For his excellent blog alone, Andreeseen deserves a lot of attention for its bracing insight about the Internet business and its future.

And Andreessen has plenty of real-life chops too, from his founding Netscape right up until today, creating a series of new Web companies (he is currently chairman of a social-networking company called Ning) and investing in a lot of others that have given him a lot of gravitas and financial windfalls over the years.

Let me clearly state, I was not sure Andreessen could ever grow out of his enfant-terrible mode when I covered him several years ago, but that has clearly happened.

He knows how to build exciting companies, he is well-liked in Silicon Valley, he knows about scale, he knows about social networking and he is a respected technologist.

Most of all, Andreessen would be a leader who would add a lot of excitement to Yahoo. And, believe me, Yahoo needs a lot of that.

Dan Rosensweig

I know, I know. But why not?

Some might question my choice of Dan Rosensweig (pictured here), mostly because he departed from Yahoo in a previous crisis, but was still part of the management group that got Yahoo into this mess in the first place.

But, think hard. Rosensweig was not in charge then–in fact, leadership failures fell to former CEO Terry Semel and also Yang.

In addition, many at Yahoo–though not all–thought Rosensweig did a decent job of running the place.

He also wanted Yahoo to take a lot more chances than it did and is well liked in Silicon Valley and Wall Street.

In leaving and then returning, Rosensweig might represent a choice that allows Yahoo employees to feel confident that some of its past soul remains.

Mark Cuban

I am not kidding. Not even one little bit.

I know Mark Cuban (pictured here hoofing with gusto) is disliked by Yang and others at Yahoo for selling Broadcast.com to Yahoo back in the last bubble and then clearing out and making bank.

And I know they were furious that Cuban popped up on Icahn’s alternative board to replace Yahoo’s current board.

So what! Big whoop! Blah, blah, blah.

Because Yahoo needs a major restart and Cuban would easily be able to push that button.

Cuban is unorthodox, has clear business acumen and success, knows how to invest and he is loaded for bear with vision.

He is also dabbling in some very interesting arena of HDTV, as well as being involved in some other interesting investments.

Cuban is willing to be controversial and often takes aim at Google, with some good results, in his blog.

His current post: “Hulu Is Kicking YouTube’s Ass.” (Ahahahahahaha. Dang, I wish I had written it.)

It’s that kind of moxie that means he is probably the only one with the guts to really get down in the weeds of Yahoo and start hacking away at the tangle that needs hacking.

Also, Cuban can sure dance.

And, most of all, the next CEO of Yahoo is going to need to know how to do some very complex two-stepping–with Wall Street, with shareholders and with employees.

And he or she is going to have to look good doing it.

Please see this disclosure related to me and Google.

Be careful what you wish for, Jerry Yang.

Because after talking to a dozen Yahoo (YHOO) execs over the weekend after the Microsoft (MSFT) takeover deal cratered, most of whom are vice presidents or above, I have to say that your stock drop isn’t the worst thing you will have to deal with this morning when you pull up at work.

The worst? That’ll be the very hairy eyeballs you will be getting from a lot more of your employees, who are scared silly and a lot peeved by the limb many feel you have dragged them and their stock options out onto.

A major decline in the share price today was of prime concern to those I interviewed, with most hoping it would not dip below $20, based on the possibility of signing a long-rumored ad outsourcing deal with Google (GOOG) soon that could potentially keep the stock higher.

Also of concern: making too many sudden moves to placate Wall Street, like a possible alternative merger with AOL (TWX) (which the Yahoo troops still don’t seem to welcome).

But causing particular dismay was the image of Yahoo’s top execs high-fiving after Microsoft CEO Steve Ballmer walked away from the deal, an act reported in the New York Times this weekend after the deal was scotched.

“That was very telling, if it was true,” said one exec, who–like everyone–did not want to be named. “It shows a complete lack of connection to the balance of the company.”

And that was the nice quote!

Last night, Yang tried to placate employees a bit by posting an aptly named communication, “OK, so now what,” on Yahoo’s blog called (not so aptly) Yodel Anecdotal. He also took a slap at, presumably, Microsoft’s PR effort and the press coverage around the takeover attempt.

“By the way, I’m sure you’ve all read or watched the news about this. Frankly, there’s a lot of nonsense and misinformation in what’s being reported. Just so we are all clear, here’s what happened. The board took its mission very seriously. We clearly indicated to Microsoft that we were open to a transaction but only if it were on terms that fully recognized the value of Yahoo and was in the best interests of our stockholders.

“No one is celebrating about the outcome of these past three months… and no one should.”

So no high-fiving anymore, right? And, just so we are all clear, everyone at Yahoo I talked to sure isn’t celebrating.

So, here’s a sampling of the feelings, none of which were positive, even though BoomTown tried mightily to get someone to render a more sanguine spin on the proceedings:

“I am in shock.”

“I don’t know if we won or we lost. I think we lost.”

“I don’t love that it was Microsoft, but I think everyone thought $33 was a pretty good offer from a pretty good tech company.”

“Having to face my staff tomorrow will not be so much fun and I need some Prozac, since I don’t know what I can say to them about how our leadership is going to get our company going again.”

“Where’s the Jelly memo when you need it?”

“I can’t really talk to Jerry, since it is difficult to tell a founder tough things he probably needs to hear.”

And, “Do you think we need to do an intervention with Jerry and the board?”

I am not sure that would work, but most employees I talked to thought a new leader at the top of Yahoo would be a good idea to give employees a fresh start and a new outlook.

Suggestions ranged from former Yahoo COO Dan Rosensweig to former Viacom (VIA) CEO Tom Freston to former eBay (EBAY) CEO Meg Whitman (pictured here).

“Jerry could become chairman, Sue [Decker] could remain president and then someone who can really charge in and make drastic change could be CEO,” suggested one exec. “Do you think Meg Whitman would do it?”

Um, no. But, ironically, Whitman was almost Yahoo CEO in a potential merger between Yahoo and eBay that never happened in the late 1990s.

As they will also say someday about 2008’s stillborn takeover of Yahoo by Microsoft: Could’ve, would’ve, should’ve.

But didn’t.

In the late 1990s, during the height of the bubble of Web 1.0, there was a poolside charity auction at an Industry Standard conference for a variety of items donated by Web luminaries.

A tie from John Doerr, the right to push eBay CEO Meg Whitman in the pool and also the little black dress that then-CEO Katrina Garnett of CrossWorlds Software had worn and made famous in a Richard Avedon-shot ad for the company.

I am blanking on the person who bought the dress, but what was most interesting about that item was that the same person kept upping his own price, and went several rounds bidding against himself before winning the prize for a lot of money.

It was amusing at the time, a symbol of a very frothy time indeed.

Today is not that time, so I was a bit perplexed at why Microsoft (MSFT) would top its own bid and raise its $31-per-share offer for Yahoo (YHOO) to $34 a share, as suggested by Citigroup (C) analyst Mark Mahaney yesterday.

There seem to be no other rivals and not much has changed since the software giant made its unsolicited offer at the start of February, except for time passing.

Of course, the only reason to do so then is to get the deal done sooner than later and perhaps the number was a public message to Microsoft CEO Steve Ballmer of that fact (as I said before, I am sure there are plenty of private messages too).

And while I am in the camp that Yahoo, well run, is probably worth a whole lot more (see this post I did at the start of this slog) than even $34–although perhaps not the $40 that Yahoo claimed last week–it’s still a matter of actually getting Microsoft to pay it by bidding against itself.

As I saw back in the roaring ’90s, it could happen. The question is: What will it take to get Microsoft to do it?

My guess if it happens: Sheer boredom and the cost of wasted time during which rival Google (GOOG) keeps chugging along and a distracted Microsoft and Yahoo do not.

Please see this disclosure related to me and Google.

Look, I love a good takeover rumor as much as the next gossipy reporter.

But all the incessant rumblings of Microsoft sniffing around to buy Yahoo or Yahoo merging with eBay are getting a tad ridiculous.

So, Deal or No Deal? Um, no deal, Howie! Really, no deal at all.

What it feels like to me is a bunch of bored and jobless investment bankers getting together for lunch at the Grill Room at the Four Seasons in Manhattan, cooking up the idea of such mergers and acquisitions and then speed-dialing gullible reporters.

While Yahoo stock was up yesterday on talk of Microsoft’s interest in it via a story in the New York Post–interest that has been written about at least 43 times over the past year–I am here to say that there is nothing new here.

Here’s what is going on and has long been going on: Microsoft continues to cast about for a viable Internet strategy, as it always does, and Yahoo is probably the numero-uno solution on its business development fix-it list.

Why? Well, the software behemoth just can’t catch Google in the lucrative search-ad market no matter how hard it tries and how much money it spends.

If it presumably put together it and No. 2 Yahoo, then presto chango, a real horse race.

But that’s kind of like stitching together Bill Richardson and Dennis Kucinich and getting a potential front-runner for the Democratic presidential nomination.

And, in fact, such a union has been raised in the past, by former Yahoo CEO Terry Semel in a trip he made to see Microsoft CEO Steve Ballmer several years ago.

It never happened then and will not now.

While Microsoft might indeed have renewed interest in such a pairing, I am here to tell you Yahoo execs do not seem to share that enthusiasm, except perhaps as a last resort or if the company’s stock price dips precipitously low.

But anyone who attended Jerry Yang’s speech at the Consumer Electronics Show in Las Vegas could see that the Yahoo co-founder and CEO has no intention of throwing in the towel quite yet.

While he might be thinking of outsourcing its search-ad business–and he should–or focusing more heavily on opening up Yahoo’s platform, a sale is like the red button of bye-bye to him.

Plus, if Yahoo were in play, there would be a feeding frenzy for the still-strong Web property–including obvious interest from Comcast, AT&T and even Google (which would never ever happen because of antitrust issues).

More intriguing is the idea of Yahoo and eBay linking up, which makes a lot more sense, but it also is not in the works.

Interestingly, Yahoo and the dominant auction site almost did merge back in the first dot-com bubble, a deal that was scuttled at the last minute over whether eBay CEO Meg Whitman would be in charge or not.

Now, such a deal seems more of a desperation play rather than a smart move–although the pair together would be serving an awful lot of customers worldwide and have some of the strongest Web brands around.

More likely is even closer ties between Yahoo and eBay, which is–sources told me–in the midst of a top-executive reorganization right now, as it looks toward the day Whitman is not in charge.

So, sorry to burst a bubble–actually, I am not sorry at all–but it is more no deal than deal here.

In fact, here is a piece I did back in late November, when Silicon Alley Insider’s Henry Blodget raised the same Yahoo-Microsoft rumors.

Please see this disclosure related to me and Google.

Look to John Paczkowski of Digital Daily for liveblogging from the conference yesterday, which included appearances by Microsoft’s Steve Ballmer and eBay’s Meg Whitman.

Today is the final day, with digital bigshots onstage like: AT&T’s Randall Stephenson, Mike Volpi of Joost and Uber-VC John Doerr.

Of course, most of the action–as always–takes place in the halls of the Palace Hotel, where the schmoozing never stops. We hung out for a bit yesterday and asked everyone their thoughts on the latest hot trend and ridiculous hype. Incredibly, the answer to both was Facebook!

Here’s a video of the scene from Day 2: