Microsoft will open its bursary for Yahoo, ups bid to $34

Mark Mahaney, a Citigroup Investment Research Analyst, reckons that Microsoft will up its bid to $34 to convince Yahoo Shareholders and the board of directors to accept the company's offer.

In what appears to be a covert approach towards Yahoo, Mahaney suggests that a $3 premium on the initial price could convince those who resisted the acquisition to accept Microsoft's offer.

Microsoft does not have that much choice given that its massive online investments have yet to pay off and rather than sitting still, Google has extended its lead online and is threatening Microsoft's own turf.

Google acquisition of Doubleclick means that the search engine giant domination of the online advertising market could pose a real problem to Microsoft if Google decides to use its coffers to expand its offerings in Software as a Service for example.

Microsoft's share prices have been up after having reached their 52-week low at the end of February; but they are still down by nearly 23 percent over the last six months.