Microsoft, AOL negotiate deal

Executives from Microsoft and Time Warner 's AOL are trying to advance discussions on a possible combination that could give Microsoft an alternative to a deal with Yahoo.

An Associated Press report also said word of a meeting follows a breakdown in negotiations between Microsoft and Yahoo over the weekend, one that led activist investor Carl Icahn to step up efforts Monday to replace Yahoo's board in an Aug. 1 shareholder vote.

AOL has been in continual discussions with both Yahoo and Microsoft, and previous talks led Google to buy a 5% stake in AOL for €630 million (US$1 billion) in December 2005.

Yahoo and Google also have separately agreed to a broad advertising partnership.

A Wall Street Journal, meanwhile citing undisclosed people familiar with the matter, said the Microsoft-AOL discussions remained preliminary but would involve the companies' online operations.
There were no indications the two companies are any nearer to a deal.

Microsoft and Time Warner officials declined comment Wednesday.

Time Warner has been entertaining the sale of all or parts of AOL as the internet unit tries to transform itself into an advertising-driven business to offset rapid declines in its dial-up internet access operations.

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