Carl Icahn has quietly built up a four per cent stake in Yahoo! since Microsoft withdrew its offer for the company.

Icahn has a history of launching proxy bids for companies he considers have lost their way. In April he won two seats on Motorola's board. His main demand, that Motorola sell off its handset business, was accepted by the company in February and it is still seeking a buyer.

But Icahn may have a tougher job doing the same at Yahoo!. Presumably Icahn wants to force Yahoo! to accept Microsoft's offer for the company, but Ballmer has made no public commitment to return to the negotiating table. In fact Ballmer's letter explicitly ruled out a proxy contest because: "Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft."

Icahn would need other investors on his side to force Yahoo! back into discussions. The Wall Street Journal quotes anonymous sources that Icahn is still to win over other investors or get a promise of a repeat offer from Microsoft.

He will need to make any decision quickly. Yahoo!'s shareholder meeting is 3 July, which means the deadline for proposing rival candidates for the board is 15 May - tomorrow.

Some institutional investors have already made clear their distaste for Yahoo!'s chief executive Jerry Yang, either by publicly criticising him or by joining a class action case, this being launched back in February when Microsoft's offer was first rejected. ®

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