As Associated Press puts it: "The tense mating dance is at a standstill because Yahoo's board has repeatedly said it won't sell to Microsoft for less than $45 billion."

Ballmer's ultimatum, setting yesterday as a deadline, presented three
options: either Yahoo! begins talking; Microsoft will make a hostile bid, going direct to shareholders; or even call it all off if Yahoo! maintains "unrealistic expectations".

A spokesman reiterated the threat that Microsoft will consider cutting its bid, now worth about $44 billion, if a deal wasn't in the bag over the weekend. Some analysts think Microsoft would be smart to walk away now.

Microsoft could position itself to return with another bid without the pain if it were to try to oust Yahoo's board in a risky proxy contest. "Sometimes the best deals are the ones that aren't done," one analyst advised.

The issue of price has been the sticking point, with Microsoft's cash-and-stock offer valued at $29.68 a share as of Friday's market close.
Yahoo!'s directors have rejected that offer as undervaluing the company. Major Yahoo! shareholders signal they want closer to $35 a share.

"Our bid is quite generous, roughly 80 times earnings," Ballmer said.

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