There’s something about deadlines that sharpens the mind. Reporters know this and Yahoo is finding out with its decision to get into a Web search advertising test with arch-rival search firm Google Inc.

Yahoo is facing a three-week deadline to sit down with Microsoft, which has offered $42 billion to buy the company, and seems to be getting ever more creative in figuring out ways to resist the advances of its suitor to the North. The length of its limited test with Google? Two weeks.

Google, of course, isn’t about to object. “A long-term deal could be the only option that allows Yahoo to remain an independent company,” a person close to Google told us.

So why would Yahoo start hooking up with Google? Flaunting its flirtation with the enemy could put pressure on Microsoft to raise the bid. After all, if the test results show a spike in advertising revenue, that could mean Yahoo is worth more to a buyer if it starts outsourcing full time. That could lead to lightening Microsoft’s wallet more than the software giant had first anticipated.

But Yahoo plays a dangerous game. Microsoft said a deal between Yahoo and Microsoft could make the Web search market less competitive, just the kind of thing that leads to politicians calling for hearings. And as Microsoft knows, trips to Washington are never fun.

Grand Theft Auto publisher Take-Two, currently fending off a $2 billion hostile bid from Electronic Arts, filed an “8-K” last week, along with an attachment titled “Investor/Media Key Q&A for 14D9 Filing.” A Take-Two spokesman couldn’t tell us what the document was used for, but the format suggests it’s a list of potential questions executives could get asked by journalists, with answers they should stick to. Pretty helpful in these days of M&A warfare, especially when you consider the extra insight on offer — that Take-Two evidently forgot to delete — on what to say and how to say it.

Here’s Question No. 7, on expressions of interest Take-Two has received (including the part in brackets):

7. What other indications of interest has the company received? How serious have these indications been? Will you disclose other offers?

• We believe Take-Two is a unique and highly attractive asset.
• The Company has received indications of interest from third parties with respect to possible transactions since EA’s announcement and has continued to receive additional expressions of serious [are we going with “serious” - I don’t know the facts, but saw that serious was bracketed elsewhere] interest since our last filing.
• While no substantive discussions have yet occurred, we intend to actively pursue all strategic alternatives after April29th that may result in a better alternative to the EA Offer.

And here’s Question No. 21, on the date for the annual meeting (note the third bullet point):

21. What is the record date of the annual meeting this year? Is there a chance you will need to change the record date?

• February19, 2008.
• We do not intend to change the record date
• If you would like, you could also say something along the lines of “The record date was set in accordance with legal requirements. There is no need to change the record date.” Of course, this answer may change if the judge rules against us on April11.

And here’s a link to the entire filing: http://sec.gov/Archives/edgar/data/94658 1/000104746908003471/a2184226zex-99_2.ht m

Photo credit: Reuters

In the war of words between CNET and its biggest shareholder, a group led by hedge fund Jana Partners, the two sides might as well be speaking in different tongues.

Jana proclaims that its motives are driven by a desire to rescue CNET — best known for tech-news site News.com, which has been hit by stiff competition from blogs — from irrelevance.

CNET prefers to speak the language of corporate bylaws that it believes will protect the company from unwanted attention, despite a recent legal setback that it plans to appeal.

But Jana seems to have understood perfectly CNET chief Neil Ashe’s recent letter to employees, where he called the dissidents “opportunistic shareholders” and labeled the proxy fight a chess match. As blogger Michael Arrington — whose TechCrunch is a big thorn in CNET’s side, according to Dealbook — reported, Jana would rather get rid of Ashe.

The Delaware court ruled in favor of Jana Partners, allowing the hedge fund and its partners to nominate directors to CNET Networks’ board, come the next shareholder meeting.

But that decision is “just another move on the chess board,” according to CNET’s CEO Neil Ashe. In an e-mail to employees, Ashe compared fights between activist shareholders and managements for board control to chess matches.

“Remember, stockholder activism is more common place today,” Ashe wrote. “We are not alone. The New York Times and IAC are both addressing similar situations. As I’ve said since the beginning, this is like a chess match.”

The Times is fighting a proxy battle with hedge fund Harbinger Capital, and IAC and its controlling shareholder Liberty Media have sued each other.

CNET said it is reviewing the court’s decision and may appeal. We’re waiting for the next move.

 Photo: Reuters file

It’s hard to think of venture capitalists giving up their peaceful deal-gathering and startup-hunting activities to participate in the kind of rabble-rousing that is the hallmark of activist investors.

But two venture capitalists are playing prominent roles in two ongoing battles — one is a full-on proxy fight and the other is threatening to turn into one.

In January, a consortium led by hedge fund JANA Partners locked horns with CNET Networks to oust the online media company’s board and nominate its own candidates. The consortium’s nominees include Santo Politi, founder of the Boston-based VC firm Spark Capital. Politi is supposed to have been instrumental in spearheading the dissidents’ approach, according to Thomson Financial’s editor-at-large and PE Week Wire creator Dan Primack. A recent meeting between the two sides aimed at avoiding a proxy battle didn’t get anywhere, a source told Reuters.

Meanwhile, hedge fund Harbinger Capital Partners, which has amassed an impressive stake in the New York Times Co. in recent weeks, also began fighting in January, though the formal proxy was only filed last month. It too has a slate of nominees for election to the Times’ board, among them, Allen Morgan, a managing director at the storied Silicon Valley venture firm Mayfield Fund.

Morgan, a lawyer by training, has remained mostly quiet, except to emphasize his passive play in the activist game. “Because of my longstanding interest in, and experience with, Internet and new media companies, I was approached by a group of stockholders of the New York Times Company to see if I would agree to become a nominee… and I’ve agreed,” Morgan wrote on his blog, www.allensblog.typepad.com,on Jan. 29.

Photo credit: Reuters file

Is video game maker Take-Two a “diamond” or a “depreciating asset” for Electronic Arts? When EA publicly announced its $2 billion takeover bid for Take-Two a few weeks ago, EA’s chief financial officer Warren Jenson told reporters Take-Two was a “depreciating asset” that had to be picked up quickly so that the two companies can be integrated ahead of the holiday season. “The longer we wait, the less value it has,” he told the New York Times.

Cut to the more recent Morgan Stanley tech conference, where Jenson sweetened his talk a little, calling Take-Two’s assets “diamonds,” according to GamesIndustry.biz, a trade publication.

“We consider the people at Take-Two, and the studios and IPs, as diamonds,” he said. EA would take these Take-Two diamonds and show them off to the “global marketplace,” Jenson said.

Take-Two has been mum ever since it spurned the offer, saying it was ill-timed and undervalued the company. Although EA’s sweet-talking might mollify Take-Two shareholders a little, it’s cold, hard cash they’re waiting for in the form of a higher offer.  Of course, it all comes down to how much EA is willing to shell out for these diamonds.

Photo credit: Reuters file

Tech stocks are plummeting, bankers are warning venture-backed companies away from IPOs, and many are convinced that we’re heading into a recession. But start-up companies, the little babies of Silicon Valley, have no cause for fear, because the tech grand-daddies — Microsoft, Cisco, IBM — continue to be bullish about dealmaking.

Their capacity for huge acquisitions, like Microsoft’s bear-hug offer for Yahoo, may be limited, but these cash-rich tech titans love to buy lots of small companies that take them to new markets or make sense for their corporate strategies. At a Redwood City venture capital conference today, executives from across the tech spectrum, including Microsoft, Cisco, News Corp’s Fox Interactive Media (which owns MySpace) and McAfee, said they remain gung-ho on acquiring start-up companies. The worsening economy hasn’t changed their attitude, it seems — two months ago, at another VC conference, they said the same thing.

Cisco dealmaker Rob Salvagno said the company has made between 10 and 15 acquisitions every year for the past few years, and he doesn’t see that changing this year. They’re going to keep up their hunt for the coolest start-ups in international markets as well, he told the crowd.

Fox Interactive Media’s Jack Kennedy said they were more opportunistic about buying companies, but are energetically prowling for “game-changers”.

And if you thought Microsoft’s eyes were trained solely on Yahoo, think again. Dan’l Lewin, Microsoft’s head of emerging business development, said the company will do “a lot more of what we’ve been doing,” which is, picking up about 20 companies a year.

Separately, Ebay’s M&A chief Lorraine McDonough in a chat with Reuters, said the Web auction giant has the ”financial flexibility” – meaning about $2.4 billion in free cash flow — to pursue attractive opportunities this year.  Ebay, best known for its buyouts of PayPal and Skype, will continue making targeted acquisitions, she has said before. For start-ups, obviously things are still green in the Valley.

Bill Gates may have splashed cash on Facebook, but that doesn’t mean he has to be on it. U.K.’s tabloid newspaper, The Sun, reported last week that the Microsoft billionaire had to delete his Facebook account after being hassled by thousands of fans.

The story also said Gates used to spend up to 30 minutes a day catching up with his buddies via Facebook, but he signed off after he started getting more than 8,000 friend requests a day and “spotted weird fan sites.”

But can Gates have really deleted his Facebook account? The New York Times reported earlier this week that being a member might mean you’ve signed a “lifetime contract” with Facebook. Apparently, Facebook servers keep copies of user information even after they have deactivated accounts, although the network responded to the story, saying it’s made it easier for users to delete their accounts permanently.

Facebook’s got ya, Gates.

Photo: Facebook founder Mark Zuckerberg, Reuters file

Every buyout rumor in the tech world seems to lead back to Google these days.  In the past week, blogs have linked at least three companies to Google. The latest is that Bebo, the social networking site with a huge fan following in the U.K., has sold itself for $1 billion and Google is the likely buyer. Now, as TechCrunch — which reported this on sources – says, Bebo would make perfect sense for Google because it fits nicely with Orkut, the Google-owned network that’s popular in Brazil and India.

Why it would make sense for Google to buy Plaxo is less clear, but that hasn’t stopped the rumor-mongering. Talk that Plaxo — unfortunately, still best remembered for relentlessly spamming users — put itself up for sale first emerged a few weeks ago, with a price tag ranging from $100 million to $200 million. The New York Times even reported Plaxo had hired Revolution Partners to handle the sale, but bankers at the firm were mum when we tried to reach them.

Both Plaxo and Bebo have cozied up to Google by joining its OpenSocial initiative, which is basically the tech giant’s response to the successful Facebook platform.

Not only that, but market talk of Google being interested in snapping up CNET Networks, currently battling a  bunch of activist shareholders, also pushed up CNET’s share price last week.

Google has declined to comment on these rumors, but at least we know that its enthusiasm in an advertising tie-up with Yahoo may be waning. So who is Google interested in? Potentially any number of companies going by the list of deals it has struck, but maybe it’s waiting for the Micro-Hoo outcome to announce its next step.

Photo: Reuters file

With buyout deals crumbling, we’re all wondering which will kick the bucket next. Thomson Financial editor-at-large Daniel Primack, who runs the popular private equity blog pehub.com, gave his take on the five buyout deals that might not make it.(He said he drew up the list for a CNBC appearance that was “semi-aborted” by Walmart news and “loquacious” host Jim Cramer.)

1. Blackstone/Alliance Data Systems: “Lawsuits started flying, and both sides wound up in front of Judge Leo Strine… That makes this one DOA, as Strine has become something of an LBO gravedigger.”

2. Myers Industries/Goldman Sachs: “Expect Goldman to begin lacing up its Nikes, particularly given that Myers is now trading nearly 50% lower than the purchase price.”

3. Clear Channel/Bain and Thomas H. Lee Partners: “Multiple trouble signs.” Primack thinks the massive breakup fee written into the deal will help push Clear Channel through in the end, “but I’m not certain enough to actually buy the stock.”

4. 3Com/Bain and Huawei Technologies: “Certain Congressmen have already raised red flags, which could lead to grandstanding, which could lead to talk radio outrage, which could lead to failure.” Lawmakers want a review of Chinese company Huawei’s bid to acquire a stake in 3Com, which makes “sensitive national security gizmos.”

5. Penn National Gaming/Fortress: “Can’t quite understand the problem here, but it makes the list due to a $17 per share spread.” Primack said this isn’t an easy deal for Fortress to bail on, “but still, that spread…”