It wouldn’t be Monday if there weren’t some new saber rattling from Carl Icahn over the Microsoft-Yahoo deal. This time, in a letter to Yahoo’s shareholders, Icahn alleges that he has been in discussions with Microsoft’s Steve Ballmer for the last week. In those calls, Microsoft apparently stated that it would still be interested in the Yahoo acquisition, but only if the current Yahoo board were ousted. Microsoft has confirmed these discussions.

In the letter, Icahn notes that he and Ballmer discussed both the sale of the complete company, as well as breaking out Yahoo’s search functionality, which many analysts had been speculating about already.

Icahn is clearly pushing to get Microsoft back to the negotiation table and given Microsoft’s response to his letter, this is apparently still a possibility.

Microsoft thinks that a deal with Yahoo is impossible with the current board still in place, because Yahoo’s management would be prone to mismanaging the company during the potentially long regulatory delay of the acquisition. Icahn notes that the old board has to go, simply because “one thing is clear — Jerry Yang and the current board of Yahoo! will not be able to ‘botch up’ a negotiation with Microsoft again, simply because they will not have the opportunity.”

Judging from the letter, Icahn is still completely transfixed on Microsoft as the only possible partner for Yahoo. His first objectives, if elected to the board himself, would be to immediately start negotiating with Microsoft and to replace Jerry Yang “with a new CEO with operating experience”.

At the same time, though, rumors about Yahoo being in merger talks with Time Warner also resurfaced again today.