Microsoft+Yahoo = $33

After having dismissed the proposal from Microsoft and Carl Icahn as all "smoke and mirrors" less than a week ago, Yahoo has signaled a stepdown.

In latest developments, Yahoo wrote a letter to investors saying the board is open to a full takeover of the company at $33 per share. As for a transaction of the search business alone, the board will consider it as long as it "provides real value to our stockholders".

Yahoo's board is working on the investors' behalf, and trying to create a partnership with market leader Google. Yahoo is also exploring other ways of boosting the company's value, signaling a possible sale of its Asian assets.

Unless CEO Jerry Yang gets shareholders on his side in the next two weeks, he risks ouster by Icahn at the annual meeting on August 1.

While Microsoft had initially offered $44.6 billion, at $31 per share, for all of Yahoo in January. The bid later went up to $33 per share, and was finally abandoned when Yang's asking rate went up. Since then, there have been repeated attempts from Microsoft to buy out Yahoo, which Yang has warded off.

Faced with intense buyout bidding, Yahoo climbed 94 cents to $22.48 on Wednesday in Nasdaq, while Microsoft advanced $1.11 to $27.26. The world's largest software maker is scheduled to report results on Thursday after the market closes.

Under the Microsoft proposal, Yahoo would have received at least $2.3 billion in shared revenue from the search assets annually over five years. Yahoo revealed the Microsoft offer would have generated about $300 million a year in cash, which compares with the maximum of $450 million annually that Yahoo expects to make from its search advertising partnership with Google.