May 13 (Bloomberg) -- Yahoo! Inc., the Internet company that rejected a $47.5 billion buyout offer from Microsoft Corp., rose in extended trading on reports that billionaire investor Carl Icahn may seek control of its board.

Icahn is considering a proxy fight and last week built a ``significant'' position in Yahoo of as much as 50 million shares, CNBC's David Faber said, citing people who have spoken with the investor. Icahn may make a decision tomorrow, the Wall Street Journal said, citing a person familiar with the matter.

The move may increase pressure on Yahoo Chief Executive Officer Jerry Yang, who spurned the offer from Microsoft, the world's largest software maker, as too low. Icahn has influenced other companies by threatening to challenge directors for their seats. Motorola Inc. said it would split off its phone business after Icahn began pushing for changes last year.

``It would be in the interests of all shareholders if an aggressive, proactive shareholder-rights activist would get Yahoo sold to Microsoft,'' said Laura Martin, an analyst at New York- based Soleil Securities. She recommends selling the stock. Icahn has ``the organizational skills. He's got the capital. He would be doing a good deed for shareholders and Yahoo employees.''

Yahoo, based in Sunnyvale, California, rose 10 cents to $26.66 in extended trading after climbing $1.30, or 5.2 percent, today on the Nasdaq Stock Market. The shares have declined 7.4 percent since May 2, the day before Microsoft dropped its bid.

Icahn isn't sure whether he would nominate a full or partial slate of directors, the Journal said. He didn't respond to phone messages from Bloomberg News.

Firebrand Partners

Investment firm Firebrand Partners LLC, founded by Scott Galloway, is also considering a board fight with Yahoo, the Journal said. The firm isn't coordinating with Icahn, the newspaper said, citing a person familiar with the matter.

Yahoo estimates it has enough investor support to win a proxy fight, the Journal said, citing a person close to the company.

Yahoo spokeswoman Tracy Schmaler declined to comment. Frank Shaw, a spokesman for Redmond, Washington-based Microsoft, said he had no knowledge of Icahn's interest in mounting a proxy fight and reiterated that Microsoft has backed away from Yahoo since dropping its bid.

Yahoo's deadline for board nominees is May 15. The annual meeting is July 3.

Microsoft Slate

Microsoft assembled its own slate of directors when planning a hostile bid for Yahoo. Its law firm sent letters to the 10 potential directors and some alternates last week releasing them from their contracts, a person familiar with the matter said.

Icahn's interests aren't limited to the technology industry. He's also backing a plan by video-store chain Blockbuster Inc. to purchase electronics retailer Circuit City Stores Inc., and said May 9 he would purchase the company himself if Blockbuster can't get financing. He also nominated three board members in a challenge to drugmaker Biogen Idec Inc. after criticizing the company's sales process.

To contact the reporter on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net.

Last Updated: May 13, 2008 17:59 EDT