Unable to come to terms even about coming to terms, Steve Ballmer and Jerry Yang have been reduced to negotiating via the Wall Street Journal. The latest update: Microsoft may, repeat, may launch a hostile bid for Yahoo as soon as Friday; Yahoo is awaiting Microsoft's decision. Microsoft might offer as much as $33, to appease Yahoo shareholders who think its original bid is too low, but those same shareholders want something in the range of $35 to $37. Yang, despite his public noises about selling Yahoo if offered its full value, does not seem to want to sell at any price. Does no one else see the grand joke here?

As soon as Microsoft CEO Steve Ballmer makes his next move, Yahoo could announce a plan to serve Google ads against Yahoo search results, the Wall Street Journal reports. Yahoo and Google tested such an arrangement in April and it went well enough that Yahoo CEO Jerry Yang believes a longer term deal will appease shareholders enough to keep Yahoo independent.

The future of the way people consume information is going to change in the next 10 years dramatically. We are committed to leading. We are not today leading. We've got very talented bright people. But there are some structural things in the industry that make it hard to make rapid progress. We need to gain scale. Yahoo accelerates scale. Gets us more advertisers, gets us search. Yahoo's not a strategy. It's a part of a strategy. I know exactly what I think Yahoo is worth and I won't go a dime above. We've got three big options: the friendly deal, an unfriendly deal, [or] simply to walk away. If Yahoo doesn't happen there's a number of other things we'll look at.

Steve Ballmer will announce his next move on the Yahoo bid at 1 p.m. today, Kara Swisher reports. At this morning's "town hall" meeting, he still sounded undecided; Swisher thinks walking away is the most likely outcome. [BoomTown]

Microsoft's board yesterday gave CEO Steve Ballmer "broad discretion" to decide on his own whether Microsoft should raise its offer for Yahoo, initiate a proxy fight for the company or walk away, the Wall Street Journal reports. That means if Ballmer makes the wrong call, it could cost him his job. Ballmer took over day-to-day operations from Bill Gates in 2000 and lately, things haven't gone well for the company. Vista is broken and the latest rumor is that a new operating system, Windows Seven, won't come out until 2010. And, despite Microsoft's push into online advertising, including a $6 billion buy of aQuantive, Ballmer's $44.6 billion bid for Yahoo is an admission that Microsoft's strategy has failed. Microsoft still only commands a mere 9.4 percent of the search engine market. We think he should walk away, but doing nothing carries its own risks. If Ballmer blows it on Yahoo, would anyone blame Gates for wanting to leave the company in better hands before he retires this summer?

Xobni, led by ex-Yahoo Jeff Bonforte, has declined a buyout offer from Microsoft, finding the software giant's plans for the startup too unformed. This from a team whose product is still in private beta. [TechCrunch]

Microsoft CEO Steve Ballmer is willing to offer $33 a share for Yahoo, the Wall Street Journal reports. Major Yahoo shareholders however, want $35 a share. The Yahoo board is said to be holding out for an offer in the high $30s. Meanwhile, Yahoo CEO Jerry Yang continues to negotiate an alternative deal with Time Warner that would merge AOL and Yahoo and give Time Warner 20 percent control over the new company.

Microsoft CEO Steve Ballmer has scheduled a "town hall" meeting for Microsoft employees tomorrow at 9 a.m. The subject of Yahoo will probably come up, but why would Microsoft employees beyond executives care?

Just in time for Mother's Day, United Online — best known for cut-rate dial-up brands like NetZero and Juno — is purchasing FTD, the company best known for delivering flowers. Maybe United Online CEO Mark Goldston purchased the company as a gift for his mother? Because even after reading the press release, this deal makes no sense. [BusinessWire]

During proceedings in a shareholder lawsuit against Yahoo's board, Microsoft lawyers said that the company has set aside $1.5 billion to retain Yahoo employees. This cash is separate from a Yahoo board-approved severance package that guarantees two years' pay to anybody laid off after a change in control. Already, two-thirds of our readers said they would prefer to see Yahoo merge with Microsoft instead of AOL. Sources confirm the sentiment is similar inside of Yahoo. (Photo, "Free Man's Prison," by code_martial)

Microsoft CEO Steve Ballmer plans to do something today — or sometime soon after — about Yahoo, the Wall Street Journal and its News Corp. cousin BoomTown report. Neither publications knows what. The Journal, reporting that "Microsoft's Next Move on Yahoo is Imminent" says that Ballmer has a slate of 10 directors and 3 alternates lined up to replace Yahoo's board. The Journal also reports that Ballmer's options include — but are not limited too — walking away from the deal, filing for a proxy fight or announcing the slate. BoomTown's Kara Swisher confirms that something should happen today or in the future. "What exactly that move will be is still unclear," Swisher writes. "But sources said it could come sometime after the stock market opens tomorrow."

Former Fox Interactive exec turned venture capitalist Ross Levinsohn only needs to finish the paperwork to become the biggest name on Microsoft's list of 10 nominees to replace Yahoo's board, TechCrunch reports and BoomTown confirms. The high-profile rubber-stamping position should suit Levinsohn's ego just fine.

Steve Ballmer must be itching for a fight. The culture he built at Microsoft prizes confrontation, and taking its bid for Yahoo directly to shareholders would fit his style. And he has hinted that, absent a response from Yahoo's board, he'd launch a proxy fight. But he'd be better off just walking away. Or seeming to. That's the technique Oracle CEO Larry Ellison used on BEA. He walked away when the smaller software company refused his advances. After leaving BEA to twist in the stock market's wind for a while, he returned and found it more pliant. Jerry Yang has frustrated Ballmer by playing hard to get. The move Ballmer might find unsatisfying, but most effective, would be to return the favor for a while.

Yahoo CEO Jerry Yang Yang's wife, Akiko Yamazaki, gave birth to the couple's second daughter this week. BoomTown's Kara Swisher reported the news, citing sources close to the company, and then warned Microsoft CEO Steve Ballmer to "give Yang a break and back off, at least for today." For Yamazaki's sake, we hope Ballmer ignores this advice and takes an upped offer to Yahoo shareholders today, while Yang's too busy in the maternity ward to fend it off. Without a job, Jerry will have no excuse to ignore the 4 a.m. wailing.

Microsoft CEO Steve Ballmer could begin a proxy fight for control over Yahoo's board toward the end of this week. Microsoft's rank and file do not want him to, according to ZDNet's Mary Jo Foley. None would go on record with an opinion contrary to Ballmer, but one anonymous source told Foley:

The news of Adify's $300 million sale was likely the first time most had heard of the online-advertising company. The San Bruno startup was so obscure that Silicon Alley Insider, which first aired the rumor of a sale did not include Adify in its list of the 25 most valuable startups. The price cable-and-newspapers conglomerate Cox paid for the startup would otherwise qualify it for that list. Ad networks, which allow advertisers to buy and publishers to sell ads across multiple websites, have become faddish; and Adify, which allowed anyone to launch a network of their own, caters expertly to that fad.

Former Yahoo executive Jeff Bonforte, now CEO of Xobni, has come up with possibly the most cynical yet useful product ever launched by a startup. Xobni, whose software tracks and analyzes email usage in Outlook, is rumored to be in acquisition talks with Microsoft. Microsoft is, to its dismay, not in acquisition talks with Yahoo. But Xobni's latest product, TechCrunch's Erick Schonfeld reports, bridges Microsoft Outlook, desktop email software widely used in corporations, with Yahoo's Web-based email. "That's the kind of demo that gets deals done," Schonfeld observes. Indeed, it may make Microsoft wonder whether they need to buy Yahoo at all.

Wondering what a Microsoft takeover will mean for the Yahoos? Front-page editors at the San Jose Mercury News offer what one hopes will be the last word.

CNBC David Farber reports that Microsoft will move to getting a new, takeover-friendly Yahoo board elected later this week through a move known as a "proxy fight." How have Yahoo CEO Jerry Yang and the Yahoo board responded to the news? A Microsoft advisor tells Farber: "They're still smoking dope." Seriously, though, Jerry, have you ever tried succumbing to a hostile takeover on weed?

Ning founder Marc Andreessen is already on the record about Microsoft's proposed takeover of Yahoo: He thinks it will likely go through, and turn out to be a good deal. It's a remarkably sanguine take for someone who saw Netscape bought and destroyed by AOL. In a thorough analysis for which he dragooned two corporate lawyers, Andreessen elaborates: Yahoo has few defenses, aside from a poison pill, and Microsoft will likely succeed. For all its thoroughness, the analysis is less interesting for what it says about Microsoft-Yahoo than for what it says about Andreessen.