Yahoo! tries to get a higher bid

Yahoo! Inc.'s (NASDAQ: YHOO) board met Friday to discuss a buy-out bid from Microsoft Corp. (NASDAQ: MSFT). No news was issued by the company, but several media outlets reported that the group discussed licensing its search rights to Google Inc. (NASDAQ: GOOG) for a high sum or trying to get a better bid from Microsoft

Yahoo!'s board can grow old waiting for a bump up in that offer. The Wall Street Journal wrote, referring to the Google option (subscription required), that "such a deal could increase Yahoo's cash flow and give it more latitude to try to thwart the Microsoft approach." While the deal might bring in more money and allow Yahoo! to fire much of its R&D staff, there is no guarantee that it will keep the firm's stock north of $30. Except for periods when there were rumors of a buy-out, shares have traded in the $20s and were below $20 slightly before the bid from Redmond.

Steve Ballmer knows all of this.

It's time for Yahoo! to admit that its business has faltered badly and probably cannot recover. It could always out-sourced its search business to Google. It clearly never thought the idea was good enough.

And, regulators are not going to like the idea of the No.1 and No. 2 search companies teaming up.

Douglas A. McIntyre is an editor at 247wallst.com.