Microsoft-Yahoo talks driven by specter of Icahn, Google

But Icahn, who owns a 4.3 percent stake in Yahoo, so far has indicated he isn't willing to wait until next year. And many other major shareholders appear ready to back him.

Kessler doubts Yahoo will be able to placate its shareholders by entering a partnership with Google, particularly if the alliance could hurt Yahoo in the long run by subverting its own technology in the critical search advertising market.

"It's almost a no-win situation for Yahoo because they aren't going to get sufficient time to prove they are worth $33 per share or more," Kessler said.

(This version CORRECTS spelling of analyst's first name to 'Sandeep' not 'Sanded')