Although big deals are always under consideration by the big players I think the latest rumor that Microsoft will be buying up Facebook soon is false. If you read John Furrier’s carefully worded post – the only source of this rumor – all John has done is confirm what is already known about Microsoft and Yahoo meeting regarding an alternative plan to a full takeover.

Carl Icahn is in the process of effectively handing Yahoo over to Microsoft right now and Yahoo’s frantic negotiations with Microsoft are likely a result of fending off a proxy battle that would take Yahoo’s current board, including CEO and founder Jerry Yang, out of the game. Based on their behavior so far this appears to be a fate worse than losing a few billion in Yahoo’s short term valuation.

Disclosure: Long on Yahoo