Yahoo Inc. yesterday became the latest potential suitor for America Online, joining Google Inc. and Microsoft Corp. in what may soon turn into a bidding war for the Dulles-based Internet service.

The talks between Yahoo and AOL's parent company, Time Warner Inc., are at an early stage and have involved the exchange of basic information, sources said. Both Microsoft and Google are further along in their negotiations with Time Warner, according to people familiar with the situation who spoke on the condition of anonymity because of the confidential nature of discussions.

Corporate financier Carl C. Icahn -- who is pressing Time Warner to take action to boost its stock price -- said in an interview yesterday that selling a stake in AOL was positive, provided the giant media company uses the cash to help pay for a $20 billion stock buyback. Icahn also wants Time Warner to sell or spin off to shareholders its cable systems unit.

"Doing this AOL deal is on the way, but not enough, to enhancing shareholder value at Time Warner," said Icahn, who heads an investor group that owns about 3 percent of the company. "It proves my point that there is a great deal of unrealized value here. The best investment the company can make is in their own stock at this time."

Time Warner stock has been flat for some time, trading around $16 to $17 a share.

The jockeying by suitors marks another sharp turn in AOL's fortunes. In the late 1990s, AOL was the top online gateway for Americans getting acquainted with the Internet. But as speedy broadband service became more popular than AOL's slower dial-up access, AOL began losing subscribers, and within a few years of its 2001 merger with Time Warner, the service was widely viewed as a dinosaur.

But AOL still commands a large customer base and is refashioning itself as a free site instead of one that charges for access. The newly intense interest in the Internet service provider began after Microsoft proposed that its MSN search engine replace Google on AOL. In addition, Microsoft would put cash into the deal and combine its MSN service with America Online.

Google, eager to block Microsoft's overture and remain the search engine on AOL, next proposed that it buy a stake in America Online as part of a transaction that would cement its position as the Internet service's search engine of choice. AOL is Google's single biggest source of ad revenue; Comcast Corp. may join Google in its bid for AOL.

Yahoo -- Google's biggest competitor in helping computer users quickly find information online and then profiting by showing them ads -- has made its potential interest in AOL known to Time Warner executives. Like Microsoft, Yahoo wants to replace Google on the AOL service. That would give Yahoo access to the roughly 111 million users of AOL's subscription service and its network of Web sites, including Mapquest and Moviefone.

Scott Kessler, an analyst with Standard and Poor's Corp., compared the jockeying over AOL with what happens when a number of people become interested in buying the same house. Even though it may have defects -- and in AOL's case, the biggest defect is a shrinking dial-up subscriber base that has been falling by about 2 million users a year -- it also has attributes, including its extremely popular AIM instant messaging service. AIM users are viewed as potentially lucrative targets for online advertising, movies and other videos, music and phone calls over the Internet.

"A lot of these companies look at AOL as an entity that has huge traffic, a substantial number of users, a fair amount of subscribers and access to unique and differentiated content and services," Kessler said. "Right now, it is very prized real estate when it comes to the Internet, particularly because its valuation may be depressed since it is in the midst of an ongoing turnaround, and part of a large conglomerate."

This week, Microsoft and Yahoo announced plans to connect their instant messaging networks. That move raised the possibility of creating two rival camps, one with Microsoft and Yahoo and the other with AOL and Google.

Despite its shrinking subscriber base, AOL has continued to generate more than $1 billion in cash annually for its corporate parent Time Warner by cutting computer-network expenses and other costs. AOL is planning to reduce its payroll early next week by dismissing a number of employees who work in its member call centers, according to people familiar with the company's cost-cutting strategy.

Time Warner has made it clear to all potential suitors that it would be willing to sell a minority stake in AOL, provided it retains voting control over the Internet service.

Under one scenario that has been discussed, Time Warner would, as part of a deal with Google or Microsoft, sell about 15 percent of stock in AOL to public investors. That would help to establish a value for AOL that, presumably, would contribute to a rise in Time Warner's stock price. However, this is only one of a number of possible outcomes, and no decisions have been made about the ultimate structure of any deal, sources said.

A combination of AOL and Yahoo could pose antitrust objections from federal regulators because Yahoo, with hundreds of millions of registered e-mail users, and AOL are two of the most heavily trafficked Internet services, as measured by comScore Media Metrix.

Carl Icahn said selling a stake could be good.

Google, Comcast, Microsoft and Yahoo have expressed interest in buying a minority stake in Time Warner's AOL.