MSFT aint buying YHOO's bluff...That's not to say that they won't increase the offer. However, I don't see some $40 or even $35 bid. What I see is MSFT discussing the fact that YHOO has ZERO other options. Yang hates GOOG as much as he hates MSFT. An AOL/YHOO merger is two, two, two turds instead of one. So, I say MSFT comes out and announces something like, "We understand Yahoo believes their company is worth more than the initial $31 PPS offer, we believe YHOO and MSFT will make a good team. We would like to conduct a takeover as smoothly as possible. There for we raise our bid to $33 per share as our final offer. If YHOO does not accept this bid of $33 per share by Friday, February 15, we will then seek to acquire YHOO through other, more direct methods.
I really don't think there will be a firm counter offer today, although it sounds like they WILL announce something to disucss what Yahoo said... I say they certainly won't burn bridges and say something like they will consider all possibilities and options going forward and leave it open for now. Bit of a waiting game.
You have no way of seeing the value in the company. MSFT does. It probably is worth 45.00/share but not with Yang and his wingnuts running it. They have proven that over the last 8 consecutive quarters. MSFT has management team that consistently delivers earnings performance. They CAN unlock the value in YHOO. That is why they may be willing to go a little higher.