And a quick one, too, without the troubles of figuring out how to make money off of Internet hipsters' self-indulgent ramblings. Karp has toyed with charging users for extra features, but it's not clear that adding fees would draw much revenue. Nevertheless, Tumblr was able to raise $4.5 million in December, an investment which reportedly valued the company at $15 million.

An incredible amount for such a young startup with such fuzzy hopes of making money. But it's a bargain compared to Twitter, a startup similarly unburdened by the depressing reality of actual revenues. Which is why Yahoo might, just might, be willing to part with as much as $50 million for it. (In a sad recognition of how late Yahoo is to the whole Twitter phenomenon, its PR department set up a Twitter account today.)

We hear the talks are serious, led by Tapan Bhat, a fast-rising executive in charge of Yahoo's homepage and other key properties — but as with any acquisition talks, they could fall apart. Fred Wilson, a partner at Tumblr investor Union Square Ventures and a Yahoo spokeswoman did not respond to inquiries about the talks. In a text message, Karp, confirming his reputation for adorably juvenile sarcasm, wrote, "You got it backwards."

What could kill the deal: Already, Yahoos are grumbling at the idea of spending tens of millions of dollars on a revenue-free startup. The company's spending spree on Web 2.0 startups like Del.icio.us and Flickr has yielded few visible financial results. Some grumble that has more to do with Yahoo's mismanagement of the acquisitions, but the point is the same: Why should Yahoo spend more on startups, having failed to profit from the ones it already bought?

And there's also new CEO Carol Bartz, who is waging a pointless jihad on leakers. She may be angry enough that word of the talks has escaped Sunnyvale that she may kill the deal for that reason alone.

Update: Awww, Karp is adorably denying the rumor of Yahoo's interest in his company! Then again, he also claimed Tumblr was buying Yahoo, so who knows what to make of anything that comes out of his so-cute-you-could-pinch-'em cheeks? His lead programmer, Marco Arment, is also perkily insinuating that he would quit if Yahoo bought the company:

I hope they let me work on some of the many exciting projects at Yahoo! Who needs a high rank at a small company in New York? I want to move to California and get stuck in traffic every day on the way to my midlevel engineering job where I sit in a cubicle all day and can't make any product decisions while working on something nobody will ever see to manage regional ad clickthrough stats tracking.

Time Warner has been trying to sell its Internet unit since at least 2005, but Bewkes and his colleagues want a higher price than the market seems to be offering. Meanwhile, AOL's value keeps slipping.

Yahoo's top executives have thought about buying AOL to bulk up against Google — and, depending on who you ask, either fend off Microsoft, or make a more appealing package for Microsoft to buy.

Ballmer flirted with buying Yahoo, but really wants its search business; he'd be happy to pick up AOL's share of the search business, too, especially as it's controlled by Google.

The thing is, all of those statements are as true today as they were a year ago. In a year of round-and-round talks, nothing has changed — least of all, these players. Yahoo has a new CEO, former Autodesk chairman Carol Bartz, but the software executive wasn't in New York.

Fresh blood would be helpful here, to either get a deal done or declare talks off for good. Google has continued to add market share as its competitors dither; advertisers are getting nervous about its growing control of the online advertising business. They'd like to back a rival. But who? Less talk, more action, please. Only Larry and Sergey will be happy if Bewkes, Bostock, and Ballmer meet next year in New York.

A tipster reports spotting the two:

On my way down the elevator, I was stopped on the 5th floor and in walk Roy Bostock and Steve Ballmer. Kind hellos were exchanged. As we entered the lobby they both walked out and seemingly proceeded to lunch together.

An odd couple. Bostock, an adman who now runs Yahoo's board of directors, and Ballmer, the shouty head of the software giant, have spent most of the past year badmouthing each other after a merger deal worth $45 billion fell apart. (Microsoft badly wanted Yahoo's search business, so it could better compete with Google; but Yahoo wanted more money and less uncertainty, since any merger might take a year to get past regulators.)

At one point, a Microsoft flack called Yahoo's recounting of how the deal went down as "revisionist history." Bostock, meanwhile, testily defended himself at Yahoo's last shareholder meeting. And now they're back together, smiling and lunching?

The first conclusion one might jump to: Bostock, having filled Yahoo's CEO chair with a seatwarmer, is ready to cut a deal with Microsoft. Ballmer has already said he'd like to negotiate a deal with Yahoo, and soon. But why would Bartz, a hardcharging, tough-talking sort who formerly served as design-software maker Autodesk's longtime CEO, take the job if she was just going to see the company sold?

A more innocent possibility: Bostock and Ballmer may have agreed to talk as soon as Yahoo appointed a new CEO, and they happened to both be in New York at the same time.

A more disturbing scenario: Bostock is trying to negotiate a sale of the company or its search business behind Bartz's back. A clumsy move, but Bostock, whom many Yahoos regard as an ineffectual "empty suit," might just be stupid enough to try it — in which case Bartz will have to spend her first months battling a rogue board chairman rather than fixing Yahoo's urgent problems. She would do well to oust Bostock, at any rate; as grateful as she might be for the job, Bostock has been a disastrous chairman for Yahoo, from his mishandling of the Microsoft negotiations to his foolish appointment of Yahoo founder Jerry Yang as CEO.

And there's one last twist: The place where they met. Time Warner has long been interested in unloading AOL, its troubled Internet unit, on Yahoo — but only at the right price. And Microsoft might still want to strike a search deal with a combined AOL-Yahoo. Was the popular midtown-Manhattan location just coincidence — or were Bostock and Ballmer also paying visits to AOL's parent? Tips are welcome.

A ludicrously patchy trial balloon lifted off this week, airing the notion that Microsoft might fund some kind of complex buyout of Yahoo, at a knockdown price of $20 billion — less than half what Microsoft offered last February. It was swiftly shot down: If Microsoft wanted to get its hands on Yahoo, why would it loan someone else the money to buy it?

Another tall tale is making the rounds: that Sue Decker, Yahoo's president, is still a candidate to replace founder Jerry Yang, who's stepping down from the CEO job after a disastrous year and a half. (Anyone care to bet on whether one of the "sources familiar with the search" who told CNET News that Decker was a contender was Decker herself?)

Decker, a former investment banker, wrecked her credibility with Wall Street through overoptimistic forecasts. Never a strong manager, she similarly killed whatever loyalty Yahoos had left for her through her mistreatment of key underlings. (She had Wenda Harris Millard, Yahoo's former U.S. sales chief, locked out of her office over the weekend when Millard told Decker she was planning to leave — and only months later thought to invite Millard to a farewell party, which Millard refused to attend.)

What Decker has going for her: She's already in place, and is a known quantity. If Yahoo's CEO search utterly fails to find an outside candidate and doesn't settle on a board member, Decker is the board's only option. John Chapple, a board member who was previously CEO of Nextel Partners, has said he's no longer interested. One of the outside possibilities, Vodafone CEO Arun Sarin, has reportedly dropped out. Another, former Autodesk CEO Carol Bartz, has yet to express any enthusiasm. But what does it matter that you have a known quantity, when you have taken that quantity's measure and found it lacking? Insiders whisper that Yang, Yahoo's dithering founder, is loyal to a fault, and that's the only reason Decker has not been fired.

If Yahoo ends up with no choice but Decker, it will surely spell the end of the company. What options will she have, other than to sell it at a cut-rate price to Microsoft?

How depressing for a company once worth more than $100 billion, which promised to bridge Hollywood and Silicon Valley and dominate new media. It still has formidable assets, and valuable businesses. Why does no one know what to do with them?

The show features rich people lying to poor people and then giving them money, and it's now up on Hulu. All you need to see are the first 11 minutes. Watch Chahal give a tour of his $6.9 million nouveau gauche monstrosity of a penthouse, and fumble around trying to buy groceries. "Buying groceries, it's not that easy," he says. For Yahoo shareholders, watching him give away tiny portions of his fortune will be far too painful. As deserving as the recipients are, they'll wish Chahal was handing their money back to them.

It's been a grindingly frustrating comedown for what was once the preeminent brand on the Web. Microsoft offered to buy Yahoo for $45 billion in February; the company is now worth a third of that. Miller would pay $28 billion to $30 billion for Yahoo, if he can raise that sum from sovereign wealth funds, the investment pools run by cash-flush Middle Eastern and Asian governments. They are understandably skittish at the idea of paying twice the going rate for a stake in Yahoo.

The notion is that Miller would run the show, and thereby make money for his investors. Fired as AOL's CEO in 2006, Miller has been rehabilitating his reputation as an investor ever since. (He's been amply helped by his replacement, former NBC executive Randy Falco, who has proved to be a thoroughly useless corporate stooge.) But Miller did not demonstrate at AOL what Yahoo so desperately needs: a keen product vision, and a ruthless determination to get his way with dithering engineers.

It's pathetic, really, that Yahoo hasn't yet been sold or found a CEO to replace hapless founder Jerry Yang. The company's traffic is still immense. And it's big in Japan! Someone, somewhere ought to think that Yahoo is worth saving. That Miller is the best Yahoo can find speaks volumes

'Twas always thus. Twitter was never really a company; it was a feature invented at another forgotten startup, spun off into its own venture. The programmer who came up with the idea for Twitter, Jack Dorsey, was named CEO, while Twitter's better-known backer, Ev Williams, a Webhead who struck it rich by selling Blogger to Google five years ago, dithered about how much he wanted to be involved.

Despite Williams' seeming indifference, Twitter took off — so much so that a crush of new users strained its servers, to the point that the service became famous for its technical incompetence. (The "fail whale," a cheery cetacean icon displayed when Twitter's website was unavailable, now appears on T-shirts in San Francisco and Brooklyn.)

In its business affairs, too, Twitter is proving incompetent. Most Web 2.0 startups run cheaply, but Twitter faces large bills from cell-phone companies which charge it for forwarding text messages to cell phones; the more it grows, the more it pays. And it has yet to announce publicly a way to make money.

That's not to say it doesn't have a scheme. The latest one we've heard floated: Twitter would charge companies to have verified Twitter feeds, so users would know that a message from, say, ExxonMobil really came from the oil company. (It's not as hypothetical as it sounds; a Twitter user inexplicably impersonated ExxonMobil this summer.) Verified accounts might then pay Twitter for every message they send, and also get prominent listing in a Twitter directory.

If that sounds like utter nonsense, the fever-dream imaginings of a desperate business-development executive high on whiteboard-marker fumes, that's because it is.

With no real hope of making money on its own, Twitter's best hope is a buyout. But its executives have handled that poorly, too. Dorsey botched talks with Yahoo and then Facebook; he didn't even tell his own board of directors he was talking to Facebook about a proposed $500 million acquisition. After that, he was fired as CEO and replaced by Williams, but stayed on as chairman, a nominal job which doesn't require his presence at the Twitter office. One prominent Silicon Valley investor is fuming that Dorsey is still on the payroll at all.

This Mickey Mouse operation is the future of news? That's not the most frightening prospect. Even if Twitter were competently run and profitable, the end result is an unreadable jumble. Look closely at the coverage, if you can call it that, of the Mumbai attacks on Twitter. Sitting at their desks in the U.S., most people had nothing to add except to observe that Mumbai used to be called Bombay — the kind of message that makes you wish Twitter's length limit was zero characters, not 140.

As more users join, the Twitter feed becomes filled with more and more noise; repetitive retweetings, back-scratching praise, and self-congratulation. A set of amateurs celebrating each other not for the quality or insight of their reporting, but its brevity, swiftness, and modish form of delivery. You read it here on first. Unless you heard about it on Twitter.

What's odd is that Time Warner CEO Jeff Bewkes isn't getting more criticism for AOL's numbers. As the head of HBO, he was one of a handful of Time Warner executives who loudly opposed the AOL deal. But enacting Time Warner's revenge on AOL by driving the business into the ground seems a strange way of making things right with shareholders.

Bewkes's hand-picked boss for AOL, former NBC executive Randy Falco, has been a complete disaster — a short-timer waiting for the company to be sold. Bewkes and Yahoo's Jerry Yang have been holding desultory talks on selling AOL to Yahoo. But Bewkes's negotiating position is considerably weakened by these results. Why didn't he sell sooner — and when will he pay the price for mismanaging AOL?

NEIL MCDONALD: So advertising and all that business model change that certainly has to be the driving force for why you were very interested in acquiring a company called Yahoo, whose stock we noticed has continued to drop. So we have to ask you if the acquisition made sense eight months ago, why wouldn’t it make even more sense now, now that the price would presumably be a lot lower?

STEVE BALLMER: Well, I don’t know if the price would be lower. We offered $33 not too long ago, and it’s $11-1/2 today, and so I don’t know what price might have really gotten the job done. It’s clear that Yahoo did not want to sell the company. It didn’t want to sell when we offered $33. You’ve got to believe they don’t want to–if they thought the company was worth more than $33 six months ago, they probably still think it’s worth at least $33 today. And so I think what we learned through that is, look, they want to remain independent. Perhaps there will continue to be opportunities to partner around search. We’re not in any discussions with them, but that was an offer we made after the acquisition had fallen through. We’ll see. I still think it would make sense economically for their shareholders and ours.

Microsoft spokesperson Frank Shaw just emailed me, asking me to attribute this to a Microsoft spokesperson: "Our position hasn’t changed. Microsoft has no interest in acquiring Yahoo; there are no discussions between the companies." Says a Microsoft spokesperson. So Microsoft's CEO thinks a Yahoo deal is a good idea — he's just not interested in it. There you have it: Microsoft is officially uninterested in good ideas. We always suspected as much, but it's nice to get it on the record.

That sent Yahoo shares dropping twice as fast as the tech-heavy Nasdaq index, a sign of shareholders' displeasure at the idea of paying that much. 24/7 Wall Street thinks that anything more than $5 billion will be viewed as overpaying. Growth in AOL's advertising business is slowing dramatically, as the Internet-access business continues to decline.

The only part of AOL that anyone seems interested in is its online-advertising network, born as Advertising.com and recently relabeled Platform-A; Yahoo, too, fancies itself an advertising broker, in imitation of Google's hugely successful AdSense program, which places ads on third-party sites and gives Google a cut of the resulting fees. AOL's Web-publishing businesses? The most-trafficked ones are duplicated by Yahoo's own, more successful media sites in area like sports, news, and finance.

And then there's dial-up Internet access, a business no one seems to want. Liberty Media might flip its shares in Time Warner for the business, but only at a bargain price. Yahoo might take it in a package deal, to save the complication of a split, and try to trade the subscribers to someone like Verizon or AT&T in exchange for a long-term advertising deal.

So who gets cut? Either Time Warner's shareholders, or Yahoo's, depending on the price that's paid. This deal seems likely to get done, if only because it becomes more embarrassing the longer it takes. But someone's going to end up with their fingers sliced.

But Microsoft and Yahoo, both looking ofr more heft, are still in talks to buy AOL. Once the separation — mostly "a bookkeeping exercise," reports the Wall Street Journal — is complete, selling off the advertising business should prove easier. Discussions with Yahoo are "the more advanced of the two," says a source who describes the deal as one that would combine AOL and Yahoo and give Time Warner a $10 billion stake in the company. It's a proposal AOL and Yahoo began discussing in April. Whether or not a deal is consummated, the fact that Yahoo CEO Jerry Yang is still considering it just shows how much pressure he's under from shareholders, even after last week's subdued shareholder meeting.

(Photos by Stewart Butterfield, maguisso, doctorow, oreilly, dsifry, heather)