• The New York Times, Tuesday, April 29, 2008 10:31 AM

The New York Times continues its around-the-clock Microhoo watch and today, the big news is that the two sides are still not talking. However, it's clearly Microsoft's turn to make a move: the software giant's deadline to reach a merger agreement passed three days ago, after which point the company said it would seek to oust Yahoo's board and take its offer directly to shareholders.

However, the strange silence from the Microsoft camp indicates that the company needed more time to ponder its next move, which could be one of three things: one, launching the aforementioned proxy battle; two, raising its offer for Yahoo (Yahoo CEO Jerry Yang said he was not opposed to a Microsoft sale at a higher price); or three, walking away from the deal altogether.

A Yahoo source, meanwhile, tells the Times that the company is still exploring other options that would allow the company to remain independent, particularly search partnership with Google. Most analysts think that that type of deal, which would merge the resources of the Web's two largest search companies, would never pass a regulatory sniff test. In other words, Yahoo is using Google as a last recourse to force Microsoft into raising its bid. If Microsoft calls Yahoo's bluff and walks away, Yahoo's stock would plummet. It could then return with a lower offer that would have to be accepted.

Read the whole story at The New York Times »