April 26th, the deadline set by Microsoft head honcho Steve Ballmer for Yahoo to accept his offer is here, and there's still no friendly deal anywhere on the horizon. The two teams are still talking only through the media and through letters in the post. Which means that sometime early next week we'll get to see Microsoft in all its pristine corporate wolf avatar. Should be fun, but what exactly are Microsoft's options at this point? Details from AFP. Microsoft chief financial officer Chris Liddell said Thursday that the US software giant is standing by its bid for Yahoo and the April 26 deadline. Microsoft's options include withdrawing its offer or taking it directly to shareholders in a hostile proxy battle. Liddell said Microsoft will make it known next week what it will do if Yahoo lets the deadline pass without accepting the offer.

I don't think withdrawing the offer is on the cards at this stage, but Steve Ballmer has also threatened to reduce the offer price, to pressure shareholders to revolt against the Yahoo Board. Will he actually have the gumption to do that? Well, looking at from another angle, he won't be doing too much at the same time. So Microsoft's choices essentially boil down to two options - Either reduce the price, or nominate a slate of Directors to the Yahoo Board. I'm leaning towards the latter, because the Wall Street Journal, citing sources familiar with the matter, says Microsoft has already assembled a formidable slate of candidates to sit on Yahoo!'s board, including former Adelphia Communications Chief Financial Officer Vanessa Wittman; Jaynie Studenmund, former chief operating officer of keyword advertising specialist Overture Services (now part of Yahoo!); former Grey Global Group boss Edward Meyer; and ex-Nextel Partners Chief John Chapple.

So Microsoft nominates its people and puts the ball in Yahoo's court. Yahoo then has to set a date for its next Annual Meeting, which according to the rules of their Delaware incorporation, has to be somewhere in July, at the latest. You can read up on what that is all about here. Point is, Yahoo has to set a date. Once they do, the clock begins ticking, and Microsoft will start working on shareholders big and small, in public and in private. They'll turn the screws and make the Yahoo Board sweat by making their case individually with shareholders, painting a picture where Yahoo stock collapses if they don't give in. It's a big game of bluff, and Yahoo can feint and delay, but not to the point of forcing Microsoft to withdraw its bid. Chances are that the Yahoo Board, already in bad shape, may not be able to maintain this balancing act of keeping Microsoft at arm's length, but not letting go. Most likely in May, and certainly not after July. So a couple of months, and Yahoo is history.