Microsoft’s board met Wednesday but floped to decide on the next step to acquire Yahoo, The Wall Street Journal reported. Sources told the newspaper that the board authorized CEO Steve Ballmer to pursue hostile takeover maneuvers or to walk away from the deal.

The board plus appears to have authorized increasing the company’s bid for Yahoo as high as $33 per share. Sources expect Redmond to compose an announcement about its intentions by the end of the week.

Microsoft’s current offer for Yahoo, a combination of stock and cash, was valued at about $29, based on the current value of Microsoft stock. Major Yahoo shareholders and management have indicated they want to see a price in the mid- to high 30s. So an offer at $33 falls short of investors’ low end but may be too close to refuse.

The Right Price?

It would take more than $33 a share to pull off a friendly merger,

said Tim Bajarin, principal analyst with Creative Strategies, in an e-mail. Yahoo CEO “Jerry Yang believes that Microsoft is undervaluing the company and most likely would not even entertain any new discussions about that unless Microsoft’s offer is in the $36-$38 range,” Bajarin said. “He and his staff believe that they can build greater value for their shareholders as a stand-alone company and unless Microsoft ups their price, I believe they will aggressively reject Microsoft’s current offer.”

The Journal reports that Ballmer’s contradictory statements last week reflect a deep-seated indecision about the acquisition. In a individual speech in Madrid on Friday, he indicated a willingness to walk away from the deal and threatened to take the bid to shareholders. Ballmer’s closest associates are said to be clueless as to which way he is leaning.

Those who know him well say the indecision reflects his personality. The Journal cited friends and…

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