Merger and acquisition news this week from Hewlett-Packard, EDS, Comcast, Plaxo, CBS and CNET -- along with Carl Icahn's battle to get a Yahoo-Microsoft deal back on track -- stoked IT investor excitement and vendor share values.

Now that first-quarter earnings season is over, investors -- especially in IT -- may be tempted to breathe a sigh of relief, but dark clouds still hang over the horizon. At various points over the past few weeks, market observers have talked about a "trendless" market, as trader uncertainty continues to spark share-price volatility.

The Internet market has been especially tumultuous. U.S. online ad spending is increasing and stirring many companies to M&A as a way to pick up market share and new technology. The Interactive Advertising Bureau reported on Thursday that online ad spending increased 26 percent in 2007 over 2006, as Google's dominance continues.

Billionaire investor Icahn thinks a Microsoft-Google combination would be well-placed to take on Google. On Thursday he made public a letter he sent to Yahoo's board, announcing he is nominating a slate of candidates to replace all board directors in the wake of the breakdown in negotiations over Microsoft's takeover bid two weeks ago.

"It is quite obvious that Microsoft’s bid of [US]$33 per share is a superior alternative to Yahoo's prospects on a stand-alone basis," Icahn wrote.

Though Microsoft has said it is no longer interested in Yahoo, clearly Icahn thinks otherwise, or possibly believes that another suitor -- perhaps his friend Barry Diller, CEO of IAC/Interactive -- may want to do a deal. Yahoo shares closed at $27.75, up by $0.61, on the news.

Just before news of Icahn's letter broke, CBS announced it will pay $1.8 billion for online media company CNET Networks in order to broaden its Web offerings. Since CNET is losing money, the price tag is a testament to confidence in the overall Internet market. Though CBS called CNET "profitable," the online company lost $6.1 million on revenue of $91.4 million in the first quarter, and made a profit in its last fiscal year thanks mainly to a tax benefit. CNET shares rose by $3.46 Thursday to close at $11.44, close to CBS' offer price of $11.50.

Also Thursday, Comcast announced it will acquire social-networking company Plaxo in a bid to enhance its community services. Comcast shares closed at $22.54, up by $0.17.

Outside the Internet sector, the big financial news of the week was HP's Tuesday announcement that it will acquire IT outsourcer EDS for $13.9 billion, or $25 per share, in an attempt to close in on IBM's global dominance in services. Even with EDS, HP will be number two: IBM has led the market with about $54 billion in revenue, according to Gartner. EDS has about $22 billion, and up to now, HP was in fifth place with $17 billion.