Yahoo! (YHOO) chief executive Jerry Yang just can’t catch a break. Not only does the Washington Post say the Justice Department has launched an antitrust investigation into the deal Yahoo recently struck with Google (GOOG), the Wall Street Journal reports that Microsoft (MSFT) is taking another run at the beleaguered Internet portal.

Yahoo stock popped 6% in morning trading on hopes that a deal with Microsoft may be reached.

The government is investigating Google’s agreement to provide search advertising for Yahoo, according to the Post report, and will demand documents from Google, Yahoo, and other large Internet and media companies to determine whether the agreement violates antitrust laws.

When the Google deal was announced, Yahoo said that it would undergo a voluntary Justice Department review, and the company contends the request was to be expected. However, the Post, citing sources close to the case, says that the DoJ has launched a formal investigation, which signals that the department may have found some cause for concern. Lawyers tell the paper that the kind of legal requests being issued by the Justice Department in this case are not used for routine matters.

Meanwhile, the WSJ says Microsoft has held discussions with Time Warner (TWX) - the parent company of Fortune.com - and News Corp. (NWS) about working together to effectively carve up Yahoo. In the past, Microsoft has floated the idea of taking Yahoo’s search business while, say, News Corp.’s MySpace or Time Warner’s AOL would take the remains.

This move by Microsoft is the latest in a takeover battle royale that has revealed shortcomings at both companies and raised questions as to whether Yahoo founder Yang is fit to run the company. Shareholders want an agreement of some sort to be reached, but it is clear that both sides remain far apart on what a merger or acquisition might look like. Microsoft has even gone so far as to say that Yang is obstructing any kind of transaction. Activist investor Carl Icahn agrees, saying that Yahoo’s refusal to play ball is hurting shareholders.

One name that stands out on Carl Icahn’s proposed board slate for Yahoo (YHOO) is Mark Cuban. Cuban, the billionaire owner of the Dallas Mavericks and the HDNet high-definition TV broadcaster, made the bulk of his fortune running Internet video firm Broadcast.com and then selling it to none other than Yahoo. Broadcast.com went public in 1998 and saw its shares triple on their first day, before Yahoo bought the company in 1999 for $5.7 billion.

Others on Icahn’s board slate - besides himself and standbys such as his right-hand man Keith Meister and former Viacom (VIA) chief Frank Biondi - include New Line Cinema chief Robert Shaye, investors John Chapple, Brian Posner and Edward Meyer, Michael Dell’s brother Adam and Harvard Law School professor Lucian Bebchuck.

But Cuban’s name stands out, because of his history with Yahoo and his success in building businesses on the Internet. On Thursday, for instance, he has a post up on his Blogmaverick.com site musing on how to take down Google (GOOG). While that’s a question Yahoo execs are presumably tackling, the last few months have clearly left some shareholders with the sense that management is more focused on saving its own skin - which is why Icahn’s spoiling for a fight.

Carl Icahn is out with his first shot across Yahoo’s (YHOO) bow. Icahn, the activist investor who has been building a stake in the Internet company in anticipation of a proxy fight, says he wants to replace the board so he can put together a deal with Microsoft (MSFT). Icahn says he believes the board has “acted irrationally and lost the faith of shareholders and Microsoft” by turning down a sweetened takeover bid at $33 a share. In typical fashion, Icahn goes on to call Yahoo’s actions “irresponsible” and “unconscionable,” and pronounces himself “perplexed.”

Icahn isn’t allowing his perplexity to stand in the way of action, however. He says he owns 59 million shares, has assembled a 10-member alternative board slate and has asked the Federal Trade Commission for permission to buy as much as $2.5 billion worth of stock. Icahn’s current stake is worth $1.6 billion at Thursday’s price of $27.45 a Yahoo share.

“During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched,” he writes in a letter to shareholders. “I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies.”

Carl Icahn is going after Yahoo (YHOO). The billionaire investor is launching a proxy fight seeking to replace the Internet company’s entire 10-member board, The Wall Street Journal reports, citing a person close to the matter. The decision comes ahead of Thursday’s deadline for nominating alternative board slates, as Fortune’s Yi-Wyn Yen notes. The Journal reports that Icahn approached Microsoft (MSFT), which earlier this month withdrew an unsolicited $44 billion bid for Yahoo after failing to reach an agreement on price, about restarting deal talks, but that Microsoft didn’t respond. Icahn has bought 50 million Yahoo shares since Microsoft withdrew its bid, which perhaps helps to explain why Yahoo shares haven’t fallen back to preproposal levels since the bid got yanked. If history is any guide, we should soon hear Icahn’s views on Yahoo’s situation and the failings of its top officials in great detail.

Blockbuster (BBI) has obviously learned a thing or two from big shareholder Carl Icahn. The movie rental company surprised investors Monday by saying it wants to buy Circuit City (CC). Dallas-based Blockbuster said it sent a letter back on Feb. 17 telling Circuit City chief Philip Schoonover of the company’s interest in exploring a possible deal. The news sent Circuit City shares soaring 54% in early action Monday even though Blockbuster said Richmond, Va.-based Circuit City “has failed to provide due diligence necessary to allow Blockbuster to make a definitive proposal.” 

The Circuit City rally comes in part because, in the great Icahn tradition, Blockbuster isn’t taking no for an answer. Instead, it’s putting pressure on its target - which is already under pressure from activist investor Mark Wattles, who is launching a proxy fight - with aggressive statements in the press. “Blockbuster is making its proposal public because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company,” Blockbuster said. “In addition, as Blockbuster has other strategic opportunities, its offer is conditioned upon timely commencement of the due diligence process.”

It’s not clear what Blockbuster’s other strategic opportunities are, given its competitive struggles against Netflix (NFLX) and the poor environment for retail sales. The company’s shares recently fetched $3.11 each, down from $10 or so when Icahn started throwing his weight around the company back in 2005.  But don’t mention that to CEO Jim Keyes. “Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage,” he says. Noting that Blockbuster is set to swing to a first-quarter profit of $30 million from last year’s $49 million loss, Keyes adds, “These results are a clear demonstration that our strategy is working.” Let’s not get carried away.

Motorola (MOT) and Carl Icahn have called a truce. The Schaumburg, Ill., tech giant agreed Monday to seat two of Icahn’s director nominees in exchange for Icahn’s agreement to drop a proxy fight. Motorola also agreed to “seek input” from Icahn on questions including who will head up Motorola’s struggling handset division once it is spun off to shareholders later this year. Motorola agreed last month to split off the handset and broadband business after a yearlong campaign by Icahn to force the company to reorganize itself.

Icahn, who owns more than 6% of Motorola through a series of purchases that began in 2007, when the stock was fetching nearly twice its recent trading price, celebrated Motorola’s decision. “This is a very positive step for Motorola in that shareholder representatives will have strong input into board decisions affecting the future of our company,” said Icahn. “In addition, the Motorola Board has also taken an important step forward for corporate governance in that the separated company which includes Mobile Devices will be essentially free from poison pills and staggered boards, both of which, in my opinion, serve to make democracy a travesty in corporate America.”

A new wrinkle emerges in the up-and-down story of Biogen Idec (BIIB). The biotech took itself off the auction block Wednesday, two months to the day after the board - under pressure from activist investor Carl Icahn - said it would seek a buyer. The news sent Biogen shares plunging 24 percent in a day, wiping away more than $5 billion in shareholder value.

But the news isn’t all bad - at least not if you’re a Biogen executive. In the days following Biogen’s Oct. 12 announcement that it would seek a buyer, several fortunate execs happened to accelerate their pre-arranged stock selling plans to cash in on the stock’s huge rise, according to a report by Adam Feuerstein at TheStreet.com. Biogen shares reached as high as $84.75 in the days after the sale announcement, compared with $70 or so just beforehand and $59 now. The company says the changes were likely to have been triggered by the stock’s runup, but that doesn’t make Biogen investors who are still holding onto their shares any richer.

Biogen Idec (BIIB) shares plunged after the biotech took itself off the block, saying that even after a two-month-long strategic review conducted by Goldman Sachs and Merrill Lynch it “did not receive any definitive offers to purchase the company.”

The decision, and the resulting 26 percent drop in the stock in Wednesday’s after-hours trading, won’t make any shareholders happy, but activist investor Carl Icahn seems likely to be particularly peeved. Icahn earlier this year took a substantial stake in the maker of the Tysabri treatment for multiple sclerosis and said he’d be willing to pay $80 a share for the whole company. Now the stock is fetching $56. That’s above its level back in the second quarter, when Icahn began building his stake - meaning he’s still likely to be ahead on the investment - but a far cry from the mid-80s where it traded at the height of the buyout rumor frenzy.

The stock’s slide brings to mind a comment analyst Caroline Stewart of Piper Jaffray made back in October, according to Fortune’s John Simons. “It’s crazy,” she said, “to suddenly say the stock is worth $20 more just because Carl Icahn says it is.” How right she was.

Activist investor Carl Icahn continues to have a way with words. Just hours after Motorola (MOT) changed its CEO — a move Icahn had previously advocated — Icahn issued a press statement Friday afternoon sketching out what he believes needs to happen next at the struggling wireless company.

Getting straight to the point, Icahn’s release — titled “Icahn Reacts to Replacement of Zander” — calls for a four-way split of the company and argues that a mere executive-suite shuffle “does not even begin to address the major problems at Motorola.” And while he believes the board’s action was “long past due” and that Zander was never  the right man for the CEO job, Icahn hastens to soften the blow by adding, “I like Ed Zander personally.”

 No word yet on whether the feeling is mutual.

Motorola (MOT) shares rose early Friday on news that CEO Ed Zander is finally on his way out. His departure follows a year of management shakeups and hefty losses in the company’s once-hot handset business, which has foundered since the Razr craze lost its edge last year. Investors including Carl Icahn have been calling for Zander’s head throughout 2007, as Motorola stock lost more than 20% of its value amid market share losses to rival Nokia (NOK).

Joan Lappin, an investor at Gramercy Capital and a Zander critic who sold her Motorola shares last year, told Fortune earlier this month that she knew Zander had lost his grip in January, when he rode into a press briefing at a tech conference on a yellow bicycle. Seeing Zander lead a once-strong company into the wilderness, she said, made her feel “sick in the heart.”

As happy as some people are to see Zander leave, Motorola stock gave up much of its early gains and was up just 1% heading toward midday. Citi analyst Jim Suva notes that while Motorola didn’t comment on how its fourth quarter is going, he finds himself wondering “if today’s announcement signals yet another disappointment for the handset segment and more meaningful changes that have to occur.”

That said, the official word from Motorola isn’t that Zander is leaving because of investor discontent. No sir. He’s just eager to get on with the rest of his life. “Next year marks my 40th year in the technology industry,” he said in Motorola’s press release. “This is the right time for me to move on to the next phase in my life and spend more time with my family.”

Replacing Zander as CEO will be Motorola’s president and operating chief, Greg Brown. He took those roles this past spring after the depth of Motorola’s handset swoon became evident. Fortune’s Adam Lashinsky notes that Greg Brown is the younger brother of Dick Brown, who was CEO at Cable & Wireless in the U.K. before he landed in 1999 at EDS (EDS). 

Dick Brown was profiled by Carol Loomis in Fortune back in February 2003, after his turnaround plan at the outsourcing firm unraveled under the weight of a massive earnings shortfall. Dick Brown would leave EDS the next month, but in the meantime the problems gave him ample opportunity to pursue what he called “coaching moments” with other staffers. It’s a good bet his younger brother will be having a few of those at Motorola in coming months, too.