Bad news because it means they're still talking and usually when that's the case, deals eventually get done; especially when you have as much time as they do.
They should have no interest in an extention of any kind because not only does he not make any sense going forward, but he's the rare prominent player who's value is unlikely to markedly increase with one.
Hawks, Cavaliers, Grizzlies, Knicks are the only teams on track to have max cap space next off season and it's highly unlikely any would have interest (maybe the Grizzlies). I've said it ad nauseam, but I think the Pistons, Magic and possibly Hornets, are likely the extent of the suitors.