SAN FRANCISCO (AP) – Microsoft Corp. threw its weight behind investor Carl Icahn’s effort to oust Yahoo Inc.’s board next month, saying Monday that a successful rebellion would encourage the software maker to renew its takeover bid for Yahoo or negotiate another deal.

The development gives Icahn a carrot to dangle before Yahoo shareholders as he wages a campaign to oust Yahoo’s nine directors at the company’s annual meeting Aug. 1.

Icahn has been arguing that a purge of the Yahoo board is the only way to salvage a deal with Microsoft – a position that the Redmond, Wash.-based software maker backed with its Monday statement.

Yahoo shares climbed $1.60, or 7.5 percent, to $22.96 in Monday’s morning trading. The company had no immediate comment.

Although it stopped short of endorsing Icahn’s slate of candidates, Microsoft made it clear that it didn’t believe it could negotiate a deal with Yahoo’s current board.

Microsoft didn’t say whether it would be willing to buy Yahoo at the same price – $47.5 billion, or $33 per share – that it offered two months ago. Chief Executive Steve Ballmer withdrew that bid after Yahoo CEO Jerry Yang sought $37 per share, a height that Yahoo’s stock hasn’t reached in 21/2 years.

After dropping its takeover bid, Microsoft tried to buy Yahoo’s online search engine for $1 billion and invest another $8 billion for a 16 percent stake in Yahoo’s remaining operations.

Yahoo instead opted for an online advertising partnership with rival Google Inc. that is supposed to boost its annual revenue by $800 million. That alliance faces an antitrust review by the U.S. Justice Department because Google and Yahoo combined control more than 80 percent of the U.S. search advertising market.

AP-ES-07-07-08 1114EDT

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