Yahoo's board of directors is meeting tomorrow. So many options. Or not.

Aside from Microsoft's solo bid, Yahoo's directors will likely discuss a plan under which Time Warner Inc. would fold its AOL unit into Yahoo in exchange for a roughly 20% stake in Yahoo. Another potential scenario for Yahoo is a joint deal with Microsoft and Rupert Murdoch's News Corp., owner of The Wall Street Journal, to combine News Corp's MySpace, Microsoft's MSN and Yahoo into a separate company, people familiar with the matter said.

Hmm. This is like shopping at a bad used-car lot.

This could all be over in a flash if Microsoft raised its bid. My guess is that it will eventually come to that, though probably not tomorrow. Steve Ballmer has a bit more time under his ultimatum, and he realizes that the Microsoft deal only looks better as Yahoo explores alternatives. So I suspect he will wait for awhile, raise the bid back up to $31/share (the original bid before Microsoft's shares declined in value) and bring the deal home.

By the way, Yahoo's biggest shareholder, Capital Research & Management Co., seems to think the price will be rising, too. According to an SEC filing yesterday, CRM nearly doubled its stake in Yahoo. It now owns 10.1% of the shares.

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