Dulles, Va. - Still searching for ways to fend off a $41.2 billion hostile takeover by Microsoft (NASD: MSFT), Yahoo (NASD: YHOO) has stepped up its talks about a possible merger or joint venture with AOL (NYSE: TWX), The New York Times reported on Wednesday. Citing "people close to the company," the paper said that Yahoo is desperately attempting to avoid a proxy fight for control of its board, which Microsoft could launch next week by nominating several new directors.

Yahoo reportedly is considering delaying its annual meeting, hoping to buy more time to work out a different business combination.

"AOL is far too small to buy Yahoo, but a joint venture or merger of the two properties... could be seen as an alternative to a sale to Microsoft," The Times reported, adding that Google, which owns a 5% stake in AOL, is in favor of such a deal.

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