Microhoo Microsoft's board of directors has at least toyed with the idea of increasing its bid for Yahoo!.

Earlier this week, according to an unnamed insider whispering to The New York Times (http://www.nytimes.com/2008/05/01/technology/01soft.html?_r=1&partner=rssnyt&emc=rss&oref=slogin), the board discussed raising its bid from $29.06 a share to $32 or $33. And, the paper says, Microsoft CEO Steve Ballmer personally phoned some heavy-hitting Yahoo! shareholders to see what they thought.

Apparently, they thought $32 or $33 was too low. They wanted something like $35 a share - or even $37. Only then would they badger Jerry Yang and crew to sit down at the negotiating table.

All this makes you wonder what happened to the proxy fight Microsoft threatened to start if Yahoo! didn't accept its original offer by April 26. That was five days ago. Ballmer's board met yesterday to discuss its Microhoo options, and it seems those options extend well beyond a proxy battle. The company may even drop the bid all together.

The Wall Street Journal (http://online.wsj.com/article/SB120958473573757167.html?mod=technology_main_whats_news&apl=y&r=307977) reports that at yesterday's meeting, the board gave Ballmer free rein to do whatever he wants. But no decision was reached. He may walk away. He may launch a proxy battle. He may try something in-between.

The Redmond software giant has earmarked about $1.5bn for employee retention package in the event of a takeover.

Microsoft's bid - part cash, part stock - was originally valued at a total of $44.6bn. But Redmond's stock price has dropped since then, and the bid now sits at $41.8bn. An increase to $33 a share would put Yahoo!'s value at $46.2bn.

Yahoo! has rejected Microsoft's original offer time and again, as it continues to "explore other options." According to the rumor mill (http://www.theregister.co.uk/2008/04/10/yahoo_microsoft_murdoch_aol/), Jerry and Co. have discussed a merger with AOL, and the Yahooligans continue to flaunt a possible ad marriage (http://www.theregister.co.uk/2008/04/09/yahoo_tests_adsense/) with Google.

We're hoping Yahoo! tries the Google trick. Just to see the reaction from Ballmer. ®

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