When last seen Yahoo was experimenting with letting Google deliver ads alongside Yahoo’s search results and trying to cut a deal to fold AOL into Yahoo, a possibility its own people reportedly abhor, while Microsoft, which delivered Yahoo a ultimatum that expires April 26 to submit or be taken forcibly at a lower price than offered – a threat Yahoo called “counterproductive� – was talking to News Corp about a joint run at Yahoo. 

Now Yahoo had another board meeting over the telephone on Friday – apparently without any resolution on the AOL deal – suggesting it is merely posturing – and Reuters is reporting that Microsoft still prefers its original deal structure and price of $31 a share without entirely ruling out a News Corp angle somewhere. 

Reuters says that News Corp is having talks with Yahoo independent of Microsoft and the Wall Street Journal, which is now owned by News Corp, said that Microsoft was going it alone. 

The AOL deal would reportedly see Time Warner make a cash investment in a combined entity in return for about 20% of the place. AOL, without its dwindling dial-up business, would be valued at about $10 billion and Google, of course, owns 5% of AOL. 

Then the idea would be for Yahoo to use Time Warner’s money to buy back a few billion dollars worth of stock for somewhere between $30 and $40 a share to pacify investors watching Microsoft and its money walk out the door, which could crush Yahoo’s stock. 

Meanwhile, Yahoo, despite antitrust issues, said it’s going to try letting Google deliver ads alongside Yahoo’s search results to test the revenue potential of an outsourcing arrangement, apparently to substantiate that it’s worth more than Microsoft’s offer. 

Google, meanwhile, has hired Frank Quattrone, the ex-Credit Suit superstar investment banker and veteran of the federal court system, as an adviser on the Microsoft-Yahoo machinations. Quattrone just started Qatalyst Group peddling merger and corporate finance advice.

And Capital World Investors, Yahoo’s biggest institutional investor and evidently smelling a killing, has doubled its position from 5.2% to 10.1%.