By Scott Moritz, writer

There may be more than money to consider in the Microsoft-Yahoo standoff.

Microsoft (MSFT) has given Yahoo a deadline of Saturday to accept its buyout offer (or, presumably, at least at start serious talks) or risk triggering a hostile takeover battle. Yahoo wants a higher offer — a demand that Microsoft has so far rebuffed.

But the focus on price may be missing a key subtlety behind the impasse.

One possible stumbling block might be Yahoo CEO and co-founder Jerry Yang’s role in a combined company. As displeased as Yang may be by the prospect of joining forces with Yahoo’s culturally-mismatched rival, some observers say he could be open to a leadership role in the merged Internet division.

“I’ve always believed Jerry Yang wants do something bigger with Yahoo,” as opposed to watching it dissolve into the works of a bigger company, says an analyst who has known Yang since Yahoo went public in 1996. ”He’s Jerry Yahoo, that’s really who he is.”

Yahoo has been exploring other options, including a possible tie up with the AOL division of Time Warner (TWX) and an advertising partnership with rival Google (GOOG) to help outsource some of its ads and trim costs. But almost any type of hookup between the No.1 and No.2 online ad giants seemed fraught with antitrust concerns.

Without a better offer in sight, Yang and the board will likely have to sit down with Microsoft over the weekend and negotiate. If Microsoft told Yang that he would play a top role in the combined company, it might sway the Yahoo founder, says the analyst, who did not want to be identified.

“He’s already a billionaire,” adds the analyst, referring to Yang. “What he wants is his brand to be massive. When the history of the Internet is written it will feature names like [Amazon (AMZN) chief Jeff] Bezos, [Google CEO] Schmidt, Page, [AOL founder Steve] Case. Yang wants to be there.”

Stay tuned.

By Josh Quittner

Er, what recession? Online retail giant Amazon beat the Street Wednesday reporting $207 million in net profit for the fourth quarter. That’s a 112 percent increase over the $98 million the company hauled in during last year’s holiday season. Amazon (AMZN) also reported revenue of $5.67 billion beating estimates that were generally in the $5.4 billion range.

The company reported record sales, record operating profits and its fastest annual growth rate since 2000. That news wasn’t altogether surprising. Last month, the company also reported the busiest day ever at Amazon and even bested eBay (EBAY), for the first time, claiming a record number of visits to its site in December. Nor was it surprising that the stock took a pounding after hours: Yet again, Amazon’s gross margins were closer to 6% than the 10% analysts wanted to see.

What is surprising — if you haven’t been paying attention, that is — is that, on a day when the Fed cut prime by another 50 basis points, Amazon is genuinely upbeat about the future. The Grand Plan is working. Indeed, Amazon anticipates 31% to 38% sales growth in the current quarter — the meltdown in the economy notwithstanding.

So what gives?

Amazon is a hit with consumers for the same reason it sometimes disappoints investors. Jeff Bezos famously refuses to manage quarter to quarter. His time horizon is more decade to decade. He wants to build a business that lasts, and the only way you do that is by thrilling your customers. He’s sung the same song since Day One of his long march: “Our focus has always been to be extremely competitive and to give customers the best prices and be very sharp at that,” he told analysts yet again yesterday.

“Focusing on the customer experience” is a mantra Amazonians chant endlessly, to an almost annoying degree. When reporters on Wednesday asked CFO Tom Szkutak questions about the world’s dire economic outlook and how that will affect consumer spending in the months ahead, he characteristically answered: “We’re focused on what’s best for the customer and improving the customer experience.” And: “We’re all about making sure we offer a great value proposition for customers.” And so on and on and on. It was effective: The press conference lasted 15 minutes because it was clear that nothing new would be divulged here.

It’s not that Szkutak was dodging the questions, exactly. The thing is, questions about the future don’t really compute to these guys. Amazon’s long-term game has always been about three things: Selection, price, and convenience. And when Bezos was laying down big bets (over the howls of Wall Street) in the late 1990s, building hugely expensive distribution centers around the country (and then the world) it was to ensure that the most logical, cost-effective logistics system would be in place when the customers finally arrived in number. That’s hell on margins for a while. But it brings in customers. And that — if it works long term — creates what Bezos Wednesday described as a “flywheel effect:” More customers means more sales and more sales means that Amazon gets to enjoy greater pricing power over its suppliers. Lower sales means more customers and the cycle begins anew.

Said Bezos: “Lowering prices is easy. Being able to afford lower prices is what’s difficult. We’ve been working on that for many many years now — and expect to be working on that for our entire corporate existence.” Today’s numbers show that Amazon’s customers, at least, have figured that out.

By Stephanie Mehta

In his first-ever keynote address at the Consumer Electronics Show Tuesday, Comcast  CEO Brian Roberts seemed to be saying content is king. (Not what you’d expect from the nation’s largest distributor of pay television.)

Roberts, who was joined by radio personality and “American Idol” host Ryan Seacrest for part of his speech, told the Las Vegas audience Comcast (CMCSA) is embarking on a strategy to make a vast library of professionally produced video content available through its “on demand” channel. “Project Infinity plans to give consumers the best and most content they will find on demand anywhere — more HD, more sports, more movies, kids’ programs and network TV,” Roberts said.

The announcement was a shot at satellite television operators DirecTV (DTV) and Echostar (SATS), which have been pledging to deliver 100 channels in high definition. (DirecTV says it now broadcasts some 85 national channels in high def.) Comcast doesn’t offer as many so-called “linear” channels in high-definition, so it isn’t surprising Roberts is touting new two-way technology that will enable it to deliver high-definition video programming on demand.

In addition, Roberts said the company was boosting its library of movies on demand (not necessarily all of them in HD).

Comcast also announced the launch of Fancast.com, a website aimed at helping consumers find, organize, view and even purchase video entertainment. The site is a sort of mash-up of entertainment database IMBD.com, online retailer Amazon, TVGuide and some of the fun, Web 2.0 apps one can find on Facebook.

One reason Roberts might be emphasizing content is because the distribution business is out of favor with investors right now. Comcast’s stock is trading near its 52-week lows, as are the stocks of Charter Communications (CHTR) and Time Warner Cable (TWC), which, like Fortune, is controlled by Time Warner (TWX).

In a recent interview, Roberts explained how cable can keep rivals from the satellite and phone businesses at bay. Content was the last thing he mentioned, but clearly programming is not an afterthought. “We have to innovate, have an open architecture and interoperate between cable companies, and our customer service has got to continue to reach new levels of excellence,” Roberts said. “We also have to have the most content, which we clearly do. Put together, we have a winning strategy.”

By Josh Quittner

One of the rallying cries of the Web 2.0 movement, during its sensational rise over the past five years, is openness. Open systems (Linux, Wikipedia, any phone you can hack from T-Mobile) are good. Closed systems (Windows, The Wall Street Journal Online, any locked-down cell phone you buy from Verizon) are bad.

The basic idea is that the Web itself, that Shiva of the business world, is built on HTML and Javascript — code that’s as open and free from any one company’s control as, say, the United Nations. Smart companies are Zen-like: They give away the store and yet manage to make fortunes. Google, (GOOG) which opens up everything from its data streams (Google Maps, for instance) to the bidding process for advertising keywords is the typical example. Google is Web 2.0 and Yahoo, which has had a tortured time trying to accommodate itself to the new social web, is considered very Web 1.0 — and on the ropes because of it.

Amazon.com has always embraced openness. Launched in 1994, it’s a classic Web 1.0 company by definition. And yet it’s also at the forefront of the social web. It allowed its customers to write reviews of products before anyone else, its enormous affiliate program lets everyone sell its products and it was among the first to make its APIs (application programming interfaces) available to developers.

So it was fun, therefore, to watch some of the smartest Web 2.0 thinkers make sense of Amazon’s (AMZN) move to a closed, proprietary world last week with the launch of its e-book reader, Kindle. This was a rollout that, on first blush anyway, made the Microsoft Zune look downright innovative in its openness. (At least you can play MP3s on the Zune. For free.)

What’s going on here?

Here’s my guess: Emboldened by Apple’s (AAPL) success, some of the most innovative companies in the tech world are starting to shift back toward closed systems.

Apple, of course, is about as closed a company as we’ve ever seen. It is what makes the company great and what makes it a horror show. It’s why people love and hate it. On the one hand, Apple products are typically so far beyond those of the competition, a visitor from another planet might think that the former is made by humans and the latter by monkeys. (A techie pal, upon picking up his new iPhone some months ago, waved it at me and gushed, “This is like something from the distant future.”) On the other hand, virtually nothing about Apple is transparent and open, from it’s ghastly press relations to the way it handles customer complaints. The recent incident with the tech pundit Robert Scoble is a great example. He downloaded an Apple update to OS 10.4 and couldn’t restart his computer. I had exactly the same problem when I updated my laptop last week. So did many, many other people, judging from the thousands of views at the relevant area of Apple’s own support site. Yet, talk to Apple support and they deny there’s even a problem. It’s about as open as North Korea.

And yet, its success speaks volumes. The stock is up over 100% during the past 52 weeks. The company maintains such tight control over the products it sells you that you aren’t even allowed to use them in unauthorized ways. Remember the whole episode when some people tried to unlock their phones, Apple updated its software and bricked the rebel phones? Talk about closed systems…

Steve Jobs has become something of the alpha pack leader of the CEOs in Techland. While many people point to the similarities between Mark Zuckerberg and Bill Gates — affluent suburbanites, both dropped out of Harvard to pursue their big-picture tech dreams — its clear that Zuck’s role model is Jobs. (Zuck uses a Mac, dresses in his own Jobsian uniform, and tends to make grandiose statements about launching movements whenever Facebook holds an event.) While Zuckerberg’s most famous move was opening up Facebook to developers (”Today, we’re starting a movement…”) so far, he’s resisting Google’s call to create a truly open platform. Developers writing applications for Facebook must use its own proprietary language, called FBML. Google, and the rest of the OpenSocial alliance of competing social networks, use HTML and Javascript.

And really, why should he? Just because it’s open?

Apple is successful because Apple is Jobs. And Jobs believes in an almost pathological control. That is, after all, how a visionary gets results.

Will that work for Amazon and Facebook?

In Amazon’s case, if Kindle flames out, it’s not a big deal. The project is an ambitious experiment, and as Tim O’Reilly points out, even if the device itself fails, Bezos could well have jump started an industry that Amazon, with its enormous collection of e-books, is perfectly positioned to dominate.

Facebook, though, is at a more critical juncture. If it stays closed and starts to stultify as a result, members could easily pack up their tents and move to the next big thing. But if it manages to fight off OpenSocial? Look for more closed systems.

Don’t these people know the economy is in the tank? Amazon (AMZN) today reported one of its best quarters ever, with revenue growing 41% and profit quadrupling from a year ago.

Nonetheless, Wall Street punished the online retail giant after hours, partly because Amazon reported diminished gross margins. (One good reason to think that was a blip, not a trend: Amazon sold 2.5 million copies of Harry Potter VII, which had wafer-thin margins. What the boy wizard giveth, he take awayeth.) The news out of Seattle was pretty good today, and Amazon is predicting, in the words of CFO Tom Szkutak, “our best holiday season ever.” With consumers in a dither about the housing meltdown in general and Chinese toys in particular, how is this possible?

Company executives yesterday say that Amazon is firing on all cylinders. Szkutak said that Amazon has more stock in stock, and lower prices, than at any time in the company’s history. He also added one more factor, which ought to confound the critics: Amazon Prime, the company’s membership program that, for a $79 annually, guarantees free two-day delivery on anything you buy. The critics had said it would never work. But it is working—Szkutak said that enrollment doubled year over year. It was recently rolled out in Japan where the uptake is just as healthy. And it will only become more efficient.

As founder and CEO Jeff Bezos claimed during an analysts’ call today, for Prime, “the opportunity on the cost side is a very large one when we have sufficient scale.” The bigger it gets, the cheaper it is. Huh? Bezos: “The opportunity is to modify the fulfillment center network so its optimized for faster delivery. As you can imagine, a fulfillment center optimized for two-day delivery looks very different from one optimized for standard delivery.”

I can’t imagine that, exactly (OK, I can: A giant warehouse filled with speed freaks zipping around on rocketpacks, perhaps.) But I believe him.

The other day, my wife was fiddling around with a new bit of software that scrapes all our credit card data and shows us the appalling ways we spend money. Our number 3 expense? Amazon. Thanks to Prime, we made 15 purchases over the past several months. Why not? Shipping is free. For the record, number one was groceries, and number 2 was the vet. My dog, Otto, has a slipped disk. No, I didn’t believe it either. If only Amazon provided medical care for over-weight dogs.

Quick bit: Asked whether Amazon’s new, MP3 store, which sells music at 99-cents a download, was eating into sales of CDs, Bezos said: “We haven’t seen any evidence of that. (But) I think it’s way to early to know if you would see evidence of that.”

Amazon (AMZN) will have to pull off another amazing quarter when it reports earnings today to prove to Wall Street that it’s still the hottest tech stock in town.

The Seattle-based online retailer’s stock has jumped by 130% since it reported its standout first-quarter earnings back in April. Investor enthusiasm has been buoyed by the company’s cutback in technology spending and move into digital services like Tivo downloads as well as by the success of Amazon Prime, a service that offers unlimited free shipping to premium members. Amazon’s shares closed at $91.29 on Monday.

The consensus among analysts is that Amazon’s pricey stock is near its saturation point. What’s up for debate is how much higher the price of its shares can go. Analysts expect Amazon to earn 18 cents per share on $3.14 billion in revenue when it reports its third-quarter earnings after the market closes today, according to Thomson Financial.

Two straight blowout quarters caused Amazon’s stock to more than double in value in the last six months. But some analysts question if the valuation is getting out of hand and outpacing the company’s fundamentals.

Bear Stearns analyst Robert Peck said that the share price was already at its limit. “Amazon will have to reaccelerate tech spending in order to support growth and remain competitive, given the spate of evolving technologies on the web,” he noted in his latest report.

Analysts will be paying close attention to assessing the company’s operating margins, its third-party sales and the growth of web services. Lazard Capital Markets’ analyst Colin Sebastian says third-quarter margins could be slightly lower than analysts’ expectations because of sales of the final Harry Potter book, which it sold at a deep discount.

“It’s a very different situation when it was $45 a share,” says Sebastian. “It didn’t really matter where Amazon’s profitability was coming from as long as it happened. At this price, we’re going to have to see progress from all sides.”