A source inside Yahoo says the company is reconsidering a previously discussed business partnership with Google as an alternative to Microsoft's $44 billion hostile takeover offer. Yahoo believes that offer, at $31 a share, significantly undervalues the company. Private equity firms and News Corp. have been named as other possible suitors for Yahoo, but neither are seen as realistically able to get a deal together. The Wall Street Journal reported today that Google CEO Eric Schmidt called Yahoo cofounder and CEO Jerry Yang to offer Google's help in thwarting an unwanted Microsoft takeover of Yahoo.

Microsoft has been making Google miserable for a year over its DoubleClick purchase — and now, with Microsoft trying to buy Yahoo, it's payback time. That's the true meaning of top Google lawyer David Drummond's statement about the Microsoft bid. He's not saying that the deal is anticompetitive: He's just asking questions. Expect Google to keep asking, and asking, and asking — all the way up and down Capitol Hill, where the search giant has been steadily building up its lobbying presence. If Microsoft thought its last antitrust battle was torture, it hasn't seen anything yet. Drip, drip, drip.

Google has posted — on Super Bowl Sunday, no less — its "only statement for the time being" regarding Microsoft's bid for Yahoo. At 291 words, it's far too long to read as you prepare to watch my UNDEFEATED NEW ENGLAND PATRIOTS crush Sam Gustin's New York Giants in Super Bowl XLII. Here's the 100-word version.

Some take umbrage with our report suggesting buying Yahoo forces Microsoft to sell MSNBC.com to NBC. These sources claim MSNBC.com earns more money than Yahoo News and they'd be surprised to see Microsoft divest itself from such a profitable property. And where there's money, there's motive to renegotiate the contract that restricts what Microsoft can do in the news business.

On this morning's Today Show, Jim Goldman, CNBC's Silicon Valley bureau chief, said one thing is for sure: Microsoft will not kill the Yahoo brand. "This is one of the world's great brands," Goldman says. Instead, expect more social networking, "the whole idea of community or the idea of getting sort of a relationship — if you will — with the website. Sort of everything you want to do online or in the world you'll be able to do through Microsoft and Yahoo." OK, so that makes no sense. Great analysis, Jim.

"This thing with Microsoft is not a lock," a source tells us. Citing executives at NBC and Yahoo, this source says that as alternative to selling out to Microsoft, Yahoo is considering selling its Yahoo Media Group to NBC Universal and doubling down on search and display advertising, essentially "throwing the kitchen sink" into beating Google. According to this source, NBC and Yahoo have already started talks.

"Thinking about Jerry taking that call from Ballmer. I think I would have puked." — Union Square Ventures VC and blogger Fred Wilson on Microsoft's bid for Yahoo. [A VC]

Here's Dylan Ratigan of CNBC, going off on the Microsoft-Yahoo merger. And we do mean going off. Ratigan is a veteran of Bloomberg News, a serious business journalist. But not in this clip. No, in this clip, it's clear that a madness has begun to creep across Ratigan's cool facade. Why? Might it be that he, the stallwart reporter, has been up since dawn covering today's news? Bringing you people constant updates on Microsoft and Yahoo? Downing coffee and skipping meals? Might that be why he's a little loopy? A little crazy? A little giddy? Just like the rest of us hacks? Hallelujah say yeah!

"I shudder to think about a MSNBC.com and Yahoo News integration," a source formerly employed by both companies in the proposed Microsoft-Yahoo merger tell us. The "cultures," she says, "will be really tough to integrate." In that case, we're happy to report the good news: There's no way it will happen. Legally, Microsoft can't keep both news sites, and if it has to choose between the two, Yahoo News would be its natural choice.

Yahoo founders David Filo and Jerry Yang own 80,833,066 and 54,110,564 shares of Yahoo, respectively. At Microsoft's offer price, the pair have made almost $1.6 billion since yesterday's close and stand to cash out more than $4 billion total if the deal goes through. More amazing? Ousted CEO Terry Semel stands to cash out more than $650 million — not a bad reward for reviving Yahoo and then running it into the ground. We doubt the scurrilous, unfounded rumors that Semel is a Scientology OT 6, but it would explain a lot. Here's our chart of the top Yahoo shareholders and how much their Yahoo's holdings are worth at Microsoft's price.

In internet land, everybody's very excited about the Redmond software giant's bid for Jerry Yang's languishing internet directory. Where would a combination leave AOL? (Answer: without an obvious acquirer or partner.) What about the challenge to Google? (Finally, a competitor, financed by Microsoft's profits from its bloated operating system and office applications.) Most of the commentary is overblown. Fusing two mediocre internet units, Microsoft's MSN and Yahoo, will not magically produce a dynamic challenger to Google; merely, if business precedent is any guide, mediocrity on a greater scale. Unfortunately, the petrified traditional media companies don't know that. (They don't know anything really.) And that's why the creation of another internet behemoth would be so pernicious.

Commenter ABMW writes:

Atop Yahoo's response to the Microsoft takeover bid, Yahoo has this "fun fact": more people use Yahoo! Answers than own an iPod. That's great! Now if only Yahoo could get each Answers user to pay $181 apiece, like 22 million iPod buyers did to Apple last quarter, it wouldn't be in this mess.

Are there any other suitors for Yahoo? Not really, according to CNBC. They shoot down a number of potential buyers including IAC, Time Warner, and News Corp. The pundits posit AT&T as the only possible mate. Henry Blodget pours water on that theory too. He talked to a "senior executive" at Microsoft who says "AT&T encouraged us to make the bid. They have no interest in buying Yahoo themselves." GIven the huge premium Microsoft is offering, they may run away with Yahoo without a fight.

On Tuesday, Microsoft CEO Steve Ballmer told Yahoo's Jerry Yang of his plans to launch a takeover, giving him two days to respond before he went public with the offer. "I could not believe Microsoft would be so aggressive," said one Yahoo executive. Yahoo: Almost too nice to function. [AllThingsD]

Does Microsoft's $44.6 billion Yahoo bid put AOL in play? Premarket trading sent Time Warner shares up 7 percent , indicating some investors think so. DealBook agrees, saying Google might target the Time Warner company for its advertising platform, "Internet service" and "Web site." Google already owns a 5 percent stake in AOL. And AOL is better at wining and dining advertisers the old-fashioned way; Google might buy the company just to bulk up its sales force. As for the rest of AOL? I don't know why Google bought even 5 percent of that.

Excerpted from Silicon Alley Insider:

Experts we trolled this morning gave us a bunch of long-winded observations on a Microsoft-Yahoo deak that boil down to this: Microsoft + Yahoo = failed search engine + failed website. A spokesman at Google was laughing too hysterically to comment.

Wall Street analysts — those lordly thinkers who would run companies if they weren't so busy pontificating about them — say that Jerry Yang should accept Microsoft's offer and that regulators will rubber-stamp the merger in due course. Of course, they also thought Panama was going to be a game-changer and that Sue Decker was a strong leader. A rundown of their newly revised statements of the obvious:

Answer: No. Don't wait around for Google to swoop in and put Yahoo out of its misery. Larry and Sergey can't even kill DoubleClick, a much smaller company they've been trying to acquire for almost a year now. Beltway busybodies are already talking up an antitrust investigation into Microsoft's bid. Now imagine Google in place of Microsoft. See? You're getting smarter already.