• D: All Things Digital/The New York Times , Friday, May 23, 2008 12:03 PM

Sources tell Kara Swisher that Yahoo CEO Jerry Yang is taking a more "realistic" attitude toward the situation facing the company, and that both he and fellow co-founder David Filo understand they have few options and that a transaction needs to happen, soon.

Maybe it was the subtle combination of Carl Icahn's proxy battle, the public admonition of several major company investors or the gentle prodding of Yahoo's independent directors-who Swisher said now preside over the company's meetings like "adult supervision"-that are spurring Yang and Filo into action. The most likely outcome, she said: a full sale of Yahoo's search engine and ad monetization to Microsoft, which desperately wants to beat Google at its own game.

As one big investor said, "I would have been happy with a $33 price then and I would be happy with one now. But since that's not happening now, I would like then to not screw up these new talks."

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