In early discussions that began in the last several weeks that apparently included a face-to-face meeting last week, Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer are finally talking about search and also advertising partnerships the companies could possibly strike, said several sources with knowledge of the situation.

According to a variety of sources, the talks between the pair and other execs at both companies are preliminary and wide-ranging, focused on what kind of commercial relationship Yahoo and Microsoft could have in the future.

But, cautioned sources close to Yahoo, the discussions are not about a renewed acquisition attempt by Microsoft and also might not result in any deal.

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About 10 days ago, BoomTown posted a piece titled, “With a King’s Ransom in Cash, Why Is There Still No Buying Spree in the Tech Space Yet?”

Noting the big cash hordes being held by a plethora of giant tech and Internet companies and their strong cash flows too, even in the midst of the economic meltdown–I wondered when the mergers and acquisitions would ever begin.

With no hooking up as yet–which feels about as annoying as the persistently unconsummated flirtation of Chuck and Blair on “Gossip Girl”–that just won’t do!

So, here are a few suggestions to get this party started.

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It seems that since Yahoo CEO Carol Bartz is playing it coy about whether she wants to do a massive search deal with Microsoft or not, the software giant is just going to keep hiring her search tech team out from under her.

Today, Microsoft said it had hired Larry Heck, VP of search & advertising sciences at Yahoo Labs, who will work in its online unit.

It’s like the rapture, except geekier.

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According to several sources, more restructuring is about to hit Microsoft’s online division as various departments are moved among and between its top execs, with changes to be announced as early as today.

While BoomTown is still gathering information, it looks like longtime Microsoft exec Yusuf Mehdi, who is now in charge of marketing, online audience business development and product management for MSN and the search properties, will get more added to his portfolio, including overall business development for the online properties.

Mehdi could eventually get purview over programming for MSN too, said several sources.

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It wasn’t just Yahoo Chairman Roy Bostock and Microsoft CEO Steve Ballmer meeting in New York last week.

According to several sources close to the situation, Time Warner CEO Jeff Bewkes rounded out the trio of chit-chatting execs, presumably gathered to discuss possible partnerships and other deals between and amongst the companies whose digital assets are among the largest on the Web.

Although the possibilities are numerous, exactly what Bostock, Ballmer and Bewkes–let’s call them the Busy B’s from here on out–were cooking up is unclear.

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In the wake of the changes at Microsoft’s online division, a senior ad sales exec, Bill Shaughnessy, is set to leave his post, the company confirmed. The departure was first reported in Ad Age, which said Shaughnessy’s future plans were undetermined and, in fact, noted it was unclear why the longtime Microsoft staffer of 15 years was leaving. Here’s why: Consolidation.

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BoomTown really does hope that in some secret airport hangar right now Microsoft CEO Steve Ballmer and Yahoo CEO Jerry Yang are meeting, in order to hammer out a fair search deal that will benefit them both. I’d even insist that Yahoo’s noisiest board member, activist shareholder Carl Icahn, be there too, to make sure all sides were copacetic and there would be no last-minute switcheroos and backstabbings. Because, long ago in galaxy far, far away, what is now going on between Microsoft and Yahoo would have seemed inane.

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As BoomTown reported earlier today in detail, Yahoo will announce its layoffs on Wednesday, as planned, of at least 1,500 employees. But many staff have also been leaving Yahoo on their own, including one recent high-profile departure–now former Yahoo Media Group SVP Scott Moore. Here’s my version on an exit interview with Moore, which I did at his Yahoo going-away party last week in Santa Monica.

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BoomTown strives to bring readers the very best in internal memo decoding, and this one is just too good to pass up.

Microsoft CEO Steve Ballmer sent a short memo to employees this afternoon about finally hiring someone to head the software giant’s lackluster digital efforts.

That someone is former Yahoo tech star Qi Lu. He will become president of the Online Services Group at Microsoft, right after the new year.

Thus, let us try to read between the lines.

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Microsoft moved up its announcement of former Yahoo tech star Qi Lu as its digital head.

BoomTown reported on the selection this morning.

As part of the changes, Microsoft digital ad head Brian McAndrews, who had also wanted the job, is leaving.

Here’s the full release.

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Former Yahoo tech star Qi Lu is poised to take on the big job of being Microsoft’s top digital executive, according to several sources inside and outside the company.

The appointment could be announced as early as next Monday.

A variety of details is still being ironed out, including whether the well-regarded techie Lu will be “paired” with another executive at Microsoft with more general business experience.

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Here’s part of an internal memo BoomTown obtained about some small, but interesting, changes at Microsoft’s MSN unit, sent out by the GM of its Global Media Group, Greg Nelson, which is under the leadership of–well, frankly–a confusing panoply of people.

That’s why I have been haranguing Microsoft CEO Steve Ballmer for a little digital clarity, especially around its consumer digital businesses and brands.

Ballmer has been searching for an overall head of that business, and it will fall to the person he ultimately selects as digital head to figure out what to do next.

Until then, let’s rearrange some chairs!

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Yesterday, BoomTown reported, based on sources, that Yahoo search exec Sean Suchter was headed to Microsoft.

Now it’s official. Here’s a Microsoft statement on the hiring of Suchter, an important tech leader at Yahoo, from Satya Nadella, SVP for Search, Portal and Advertising.

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Yesterday, BoomTown opined that Microsoft was nearing a decision on who would become the head of its digital efforts.

And, according to several sources and some puzzling by me–if the deal can be sealed–I think that Microsoft CEO Steve Ballmer’s top choice is former Yahoo tech star Qi Lu.

If Ballmer manages to pull off the hire of Lu–on the heels of already grabbing another top Yahoo search exec, Sean Suchter, which I posted on yesterday–the aggressive exec could almost be bypassing a Yahoo search partnership he has long sought by sucking the talent right out of the place instead.

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Yahoo–which has stuck to its guns by staying in the search business, even though many think it is a losing game and should be sold off to Microsoft–has lost a key engineer in that arena to–uh-oh–Microsoft.

Sean Suchter, the VP of Search Technology at Yahoo, was also deeply involved in Yahoo’s efforts to open up its search platform, initiatives the company has touted aggressively as a bright spot in its not-so-lustrous landscape.

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