SAN FRANCISCO - Hoping to negotiate a compromise, activist investor Carl Icahn urged Yahoo Inc. to declare it was willing to be bought for $49.5 billion - about $2 billion above Microsoft Corp.'s last offer for the Internet pioneer.

Icahn recommended the price, which is about $34.375 a share, in a letter yesterday to Yahoo chairman Roy Bostock.

It marks the first time Icahn has publicly indicated what price he has in mind as he tries to force Yahoo's sale before the Sunnyvale-based company's annual meeting on Aug. 1.

If a deal is not completed before August, Icahn will try to replace Yahoo's board with a slate of his own directors and then fire company cofounder Jerry Yang as chief executive officer.

Should the mutiny succeed, Icahn said yesterday, he will hire a "talented and experienced" CEO in the mold of Google Inc. chairman Eric Schmidt before trying to sell Yahoo to Microsoft.

Yahoo said it would be "ill-advised" to publicly set a specific sales price.

Microsoft declined to comment.

Merger talks between the two high-tech powerhouses fell apart May 3 when Microsoft CEO Steve Ballmer withdrew an oral offer of $47.5 billion, or $33 per share, after Yang asked for $37 per share, a price that Yahoo's stock has not reached since January 2006.

By suggesting a sales figure for Yahoo, Icahn hopes to spur Yahoo to seek a wider discussion with Microsoft, said Peter Falvey, managing director of Revolution Partners, which specializes in high-tech deals.

Microsoft has been exploring a partial deal involving Yahoo's search and advertising operations, a concept that has been panned by Icahn, and many industry analysts who say the companies need to combine completely to counter the dominance of Internet search and advertising leader Google Inc.

Yahoo shares closed up 8 cents at $26.44 amid a downturn in the stock market.