The WSJ cites sources close to the Microsoft Yahoo deal that both companies have met Friday for talks. Microsoft is apparently will to increase their offer for Yahoo.

The possible new price per share could be in the mid $30 range.

Microsoft seems to have opened the door for a last minute friendly take-over agreement. Previously Microsoft said to not raise the offer, rather they said to actually reduce it becuase of changing market conditions.
More details on the WSJ.
Microsoft offered to buy Yahoo! back on February 1st. Now 3 month later there is still no decision, just major distractions for Yahoo.

If the deal goes through, I still think Yahoo and Microsoft is still not going to gain on Google. I predict that lots of Yahoo users will switch to Google services to avoid getting stuck with Microsoft. Sooner or later Microsoft will integrate or dissolve Yahoo services in the the Microsoft platform - Microsoft is like the Borg after all.