Pride weighs heavy

Microsoft is reportedly willing to raise its bid for Yahoo to $33 a share, reports The Wall Street Journal.

The news gives legs to a recent rumor that, despite Steve Ballmer's threats to oust Yahoo's board, he'd prefer a non-hostile takeover.

Following Wednesday's board meeting, Microsoft's directors gave Ballmer discretion to either go hostile or give up the chase. Considering the public cat-and-mouse game both companies have played since Microsoft's initial offer, the latter does not appear to be an option.

Major cross-holding shareholders might protest if Microsoft decides to take the middle ground and sweeten its bid. After reporting solid Q1 earnings and forming a successful test partnership with Google, Yahoo also is more confident about its ability to keep the wolf at bay.

It is currently still in talks with Time Warner to merge with AOL, according to insiders.