Will Microsoft or Yahoo put together a winning hand?

The deal or no-deal frenzy last week had longtime tech watchers saying things like "wacky" and "desperate."

In what could turn out to be a wave of upheaval among major Internet and media powers — or just a bunch of ultimately fruitless posturing — at least four different could-be combinations including Microsoft, Yahoo, Time Warner's AOL, News Corp. and Google were rumored or already on the table.

The two most powerful players in the game are Google and Microsoft, and each one is attacking the other's position of strength.

Google is using its Internet advertising lucre to chip away at Microsoft's powerful position in business software.

The California company's latest play, expected to be released today, pairs Google Apps — a collection that includes Web-based e-mail, calendar, word processing and spreadsheets — with online customer-relationship-management software from salesforce.com.

Microsoft is charging hard after Yahoo as a way to quickly gain the scale needed to challenge Google's dominance in online search and advertising, the Internet's revenue source.

"It's all kind of driven by Microsoft's fixation on Google and trying to compete better and monetize their traffic more effectively," said Sid Parakh, technology analyst with McAdams Wright Ragen.

Microsoft's initial $31-per-share takeover proposal, made public Feb. 1, sent Yahoo in search of an alternative deal. It appeared that no one was biting, but Yahoo continued to stave off Microsoft's proposal.

Nine days ago, Microsoft CEO Steve Ballmer threatened to launch a hostile takeover and perhaps lower the bid if Yahoo doesn't come quietly by April 26. That launched a frantic round of dealing last week, chronicled breathlessly through anonymous leaks to major newspapers and popular tech and financial blogs.

"This is pure desperation," said Parakh, adding that the merger-and-acquisition talk could lead to "inflated valuations" for the online properties involved.

Mark Anderson, a technology analyst and adviser based in Friday Harbor, called the deals Yahoo was reportedly pursuing last week "wacky."

One such play, which immediately drew scrutiny on antitrust grounds from lawmakers and regulators, has Google presenting advertising next to Yahoo's search results in a limited test.

"The fact that they're willing to go to their arch-enemy Google is instructive of how they feel about [the Microsoft] deal," Anderson said.

He faulted Microsoft for failing to bring the deal to a close smoothly.

"Microsoft is not expert at doing acquisitions. It's a new idea for them in terms of big companies. This is their second one," Anderson said, referring to the company's buy of digital advertising leader aQuantive last year.

At the time, Anderson predicted that the aQuantive purchase could embolden Microsoft to pursue other deals.

Another rumor last week had Yahoo angling to buy AOL in a deal that would value Time Warner's struggling online unit at $10 billion and give Time Warner a 20 percent stake in the merged company. Yahoo would also get some cash, with which it would repurchase its own shares for between $30 and $40 each.

Yahoo's board of directors reportedly met Friday to mull its options. They have said consistently the company is worth more than Microsoft is offering, and Parakh was one of many analysts to speculate that the AOL and Google deals were floated to persuade Microsoft to raise its bid.

A rumor that Microsoft and News Corp., which owns social-networking giant MySpace, were talking about a joint bid for Yahoo added more noise and confusion. There was speculation that such a combo could also result in a raised price for Yahoo.

Parakh said the swirling deals are likely distracting management and rank-and-file at all the companies involved from their efforts to catch Google.

"Engineers sitting at MSN or at Yahoo or AOL or even at News Corp. are all distracted. They're all wondering. 'Are we going to have a job,' " he said. "Advantage, Google."

In a presentation last week, "Google vs. Microsoft," Gartner analyst David Mitchell Smith noted that "Microsoft is currently better positioned to succeed in advertising than Google is in enterprise software."

But over the long term, that balance could shift, especially if Microsoft's online efforts don't take root.

"The threat is decreased relevance," Smith said. "That comes as a result of the Web and more and more things being made available through the Web."

Even if Microsoft is successful in acquiring Yahoo — a process that faces many months of regulatory hurdles and integration challenges after an agreement is reached — "it's certainly not a given that they're going to become tremendously successful overnight," Smith said.

But, he added, "Together, they've got a better shot than they do individually."

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com