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SAN FRANCISCO (AFP) - Microsoft's chief executive told employees he will not pay "a dime above" what he thinks Yahoo is worth and they will know the next move in the takeover quest "in very short order."
Steve Ballmer's comments Thursday on Microsoft's still-unresolved 44.6-billion-dollar bid for Yahoo came during a "town hall" meeting at the world's largest software company.
"I know exactly what I think Yahoo is worth and I won't go a dime above," Ballmer said during the in-house exchange with employees posted on the Internet.
Analysts and others have spent the week eagerly awaiting Microsoft's next move in a saga that began when Microsoft made the unsolicited offer for Yahoo on February 1.
Microsoft gave Yahoo until April 26 to accept the offer but the California Internet pioneer let the deadline pass without response.
"We've got basically the three big options in front of us," Ballmer told the internal forum.
"There's the friendly deal, there's an unfriendly deal, and the third path is simply to walk away. We ought to announce something in very short order."
A source close to Yahoo told AFP the firm is awaiting Microsoft's move.
"We are all staying tuned," the source told AFP. "It is pretty clear they will have to raise their offer. Clearly, they need the company."
Citing knowledgeable sources, The Wall Street Journal reported Wednesday that Microsoft's board had "indicated a willingness" to increase its initial 31-dollar-per-share offer to 33 dollars.
That might not be enough to consummate the deal, said Canaccord Adams analyst Colin Gillis.
"Yahoo has said they are open to any deal with anyone, even Microsoft, at the right price," Gillis said. "From a shareholder angle the 35-dollar price target seems to be the number."
A meeting of Microsoft's board on Wednesday reportedly ended with directors divided regarding Yahoo.
"The prevailing thought is the board has given Ballmer some leeway to make the deal and doesn't want to do a hostile takeover," Silicon Valley analyst Rob Enderle told AFP.
"I have a hard time thinking Microsoft can put this together. Yahoo's expectations are still unreasonable and I don't think Microsoft has the resources to make it work."
Every dollar added to the per-share bid bumps the price of buying Yahoo by slightly more than a billion dollars. Yahoo's board has said it believes the firm is worth 40 dollars per share.
Ballmer told employees that Microsoft is "100 percent determined" to wrest Internet market share from search and advertising king Google.
"The world hopes that there's a very strong company that's not the number one guy," Ballmer said. "We're going to work that strategy with Yahoo or without Yahoo. Yahoo's not a strategy; it's a part of a strategy."
Microsoft is eager to merge online resources with Yahoo to take on Google, which dominates the lucrative Internet search advertising that is expected to grow to 80 billion dollars annually worldwide in the next two years.
Bluster and posturing played out in public emails, letters and statements as opposed to direct negations between the two companies has bloggers referring to the takeover wrangling as "amateur hour."
Ironically, Microsoft buying Yahoo could bring more troubles for Ballmer, according to Jay Bhatti, who worked for the software giant until leaving to start new Internet search engine Spock.com.
Most of the Spock engineers are former Yahoo employees, Bhatti said.
Ballmer must know from the paltry market share of Microsoft's online search service MSN that the team at Yahoo is better at the task, Bhatti said.
"Ballmer feels that to win on the Internet, which is the future, he has to buy Yahoo," Bhatti said. "The only way it would work is if Ballmer takes the MSN assets, gives them to Yahoo and tells them 'have at it -- beat Google.'"

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