Icahns attention is now focused elsewhere and he doesnt have enough time to devote to Yahoo, according to a letter to the board that he released yesterday. His resignation took effect immediately.

Icahn, 73, had sought to take control of the board and oust then-Chief Executive Officer Jerry Yang last year, after the company spurned a $47.5 billion acquisition offer by Microsoft Corp. To ward off a proxy fight, Yahoo gave board seats to Icahn and two of his candidates in August 2008. Since Icahn became a director, Yahoo hired Carol Bartz as CEO and forged a search- engine partnership with Microsoft.

“When I joined the board, the company was in a state of turmoil,” Icahn said in the letter. “In the period since then, we have all worked together to achieve much for the company, most notably bringing Carol on to be the CEO and then consummating the search deal with Microsoft.”

Icahn didnt respond to a phone message seeking comment.

Now that an outright acquisition of Yahoo by Microsoft seems unlikely, Icahn had less to contribute to the board, said Aaron Kessler, an analyst at Kaufman Bros. LP in San Francisco.

“Theres not really much from an activists standpoint to really do right now,” said Kessler, who has a hold rating on the shares and doesnt own them.

Microsoft Deal

Under an agreement announced in July, Yahoo will use Microsofts Bing search engine on its Web sites, with the companies splitting related ad revenue. The partnership is meant to challenge Google Inc.s dominance in the market.

“Carol is doing a great job and I believe the Microsoft transaction will provide great long-term benefits, the potential of which many still do not understand,” said Icahn.

Roy Bostock, chairman of the board, said he was grateful for Icahns “active role” in shaping Yahoo.

“Carl has been an important member of our board and has helped us through some significant transitions,” Bostock said in an e-mailed statement.

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