Yahoo Inc., the target of a hostile takeover bid by Microsoft Corp., is in the eye of a storm of potential deals involving the some of the biggest players in technology and media including Google Inc., News Corp. and Time Warner Inc.

A test deal announced today places a limited number of Google text ads on Yahoo search result pages. Yahoo did not rule out further cooperation with its long-time Internet search rival. Other possible deals include a Yahoo-AOL merger, and a joint Microsoft-News Corp bid for Yahoo, according to reports.

Yahoo is exploring several options to give its shareholders an alternative to Microsoft's offer worth $42 billion. Microsoft's bid values Yahoo at $29.24 a share, in cash and stock, which Yahoo spurns as being inadequate. It was trading at $27.77 at the close of trading today.

Investors have been dissatisfied with Yahoo's leadership due to the stock's slide in recent years. Shares have fallen from a high of $43.21 in January of 2006 to a low of $19.05 on January 31 earlier this year. The stock rose to the high twenties after Microsoft's bid was announced.

On Wednesday, Yahoo began a two-week, U.S. only test which delivers Google's text ads in about 3 percent of searches. Yahoo said the test does not necessarily mean it will join Google for any further commercial relationship.

Meanwhile, Yahoo is working on a deal to merge with Time Warner's AOL, combining both the firms' internet operations, people familiar with the matter told the Wall Street Journal late Wednesday. However there is still a lot of work to do to get the deal done, a person involved said.

The terms call for Time Warner to make a cash investment in return for a 20 percent stake in the combined Yahoo-AOL. The deal, which would exclude AOL's dial-up internet business, would value AOL at about $10 billion, the report stated. Yahoo would then use the cash to buy back its own shares to lift its stock price somewhere between the $30 and $40 range.

At the same time Rupert Murdoch's News Corporation is negotiating with Microsoft about joining in its Yahoo bid, people involved in the discussions told the New York Times Wednesday evening.

There's a long way to go before anything is definite, said one person involved in the talks. The terms would probably involve News Corp. contributing its Fox Interactive Media unit, which contains MySpace, and possibly cash to partner with Microsoft as part of a Yahoo buyout, the report stated.