News today that billionaire investor and Micro-hoo meddler Carl Icahn was given a seat on Yahoo’s board, as well as two additional board seats for people close to him, put to rest fears of a proxy fight at the August 1 Yahoo shareholder meeting.

But beyond that, it’s anybody’s guess as to what will happen next:

Is it a case of "Keep your friends close, but your enemies closer" that will allow Yahoo to move Jerry Yang and Yahoo forward less distracted by Microsoft’s various advances and the joint Icahn-MSFT proxy threat?

Or is it just the overture to a renewed round of negotiations that could still lead to Microsoft buying Yahoo outright?

Given that last week’s developments had seemed to indicate Microsoft growing weary of Icahn as an intermediary, and that some observers had previously bet on a renewed MSFT offer before August 1 to bolster the chances of unseating Yahoo’s entire board in a proxy fight led by Icahn, the latter possibility appears increasingly dim.

But given the now nearly 6 months history of the Micro-hoo saga, who really knows at this point. What we do know however is that if negotiations continue at whatever level, it would continue to serve as a distraction for both Yahoo and Microsoft from what they should be concentrating on:

Innovation.

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