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It is shaping up to be another rough day for Yahoo shareholders, now that we have confirmation that all discussions with Microsoft have come to an end with no deal of any kind being forged.

Yahoo just issued a press release saying that talks with Microsoft

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[MSFT  Loading...      ()   ]have concluded following a meeting June 8 between Yahoo

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[YHOO  Loading...      ()   ]chairman Roy Bostock and some of the company's directors -- not including Jerry Yang, and Microsoft's CEO Steve Ballmer and some of his company's independent directors. At that meeting, a source close to Yahoo tells me, Yahoo was prepared to accept the $33 a share offer Microsoft had ultimately offered to acquire the entire company.

Microsoft informed Yahoo that it was no longer interested in acquiring the entire company at that price, and preferred to enter into a kind of "hybrid partnership" where Microsoft would buy Yahoo's search business. Yahoo didn't want to part with its search advertising business since selling it would go against the company's "vision of convergence" between display advertising and search advertising. The two sides agreed to disagree, and pushed back from the table with no deal of any kind.

"Our odyssey with Microsoft is over," this source tells me.

At the same time, some blog reports and the Wall Street Journal both reported that a deal with Google

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[GOOG  Loading...      ()   ] to "partner" on search advertising was imminent, and that an announcement could come as soon as after the market closes later today. This source tells me that while discussions with Google are advanced and ongoing, a deal may not necessarily be imminent.

Meantime, with Yahoo apparently entering into a deal with Google, it just goes to show the lengths to which the company was willing to go to get out from under a deal with Microsoft. That's because when word came out that Yahoo and Google were entering into a trial partnership to see how such a search advertising deal "could" work, it immediately raised concerns among United States Department of Justice anti-trust investigators. Despite that, and despite the sure thing of a 72 percent premium on the table from Microsoft before those original talks broke down, Yahoo appears still willing to take a significant gamble on something that falls far short of a sure thing.

Further, I find it very telling that Yahoo's chairman and independent directors met with Microsoft and were apparently willing to accept the company's increased offer of $33, and made that overture a few days ago without Jerry Yang at the table. Is he being marginalized? Has he already been marginalized? It would seem that unless Yahoo has come up with a blockbuster way to make boatloads of money, and fast, that rogue shareholder Carl Icahn, pushing for his own board of directors in an increasingly vicious proxy war, might have the ammunition he needs to win. He won't win a deal for Microsoft; but shareholders might be so fed up that they'll be willing to take any board alternative presented to them.

This story isn't over. But it's getting close. And beleaguered Yahoo shareholders may be left holding the bag, and their heads. All at once.

UPDATE: In Yahoo's press release detailing the end of discussions with Microsoft, the company noted that Chairman Roy Bostock was joined by independent board members. The assumption was that CEO Jerry Yang was not in attendance because he is not an "independent" board member. Yahoo called to say that Yang indeed was at the meeting and understands the confusion, and would like me to clarify. So now I have.

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