Yahoo's board is split

Based on the NY Post's account, you have the loyalists, who include not only CEO Jerry Yang, but board member and Activision CEO Bobby Kotick. These loyalists, according to the Post, are so emotionally bound to Yahoo that they're not properly carrying out their fiduciary responsibility to the company's shareholders. In the other camp is a group of non-executive board members that appear more amenable to cutting a deal with Microsoft. That group includes L.A. billionaire Ron Burkle and Yahoo Chairman Roy Bostock.

According to one source close to the situation, "The emotional part of Yang would rather do anything but sell to Microsoft, but he doesn't have the cards to come up with a value-creating, competitive alternative for shareholders."

The FT cites a source as saying that Burkle, in particular, had been receptive when Microsoft made an approach in the summer. Now that Yahoo has turned down the initial offer, the big question is whether Microsoft sweetens its bid or holds tight.