Microsoft is talking to Yahoo! about an alternative transaction that doesn't involve an acquisition, the world's largest software maker said Sunday.

Just a few hours after Yahoo! rejected Microsoft's $44.6bn purchase offer, the Redmond-based software giant has responded, reiterating that it "reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal."

Microsoft has committed to becoming a mixed ASP.NET and PHP shop for the "foreseeable" future should its proposed Yahoo! acquisition succeed, rather than convert popular services like Yahoo! mail to Microsoft's .NET architecture.

Neither Microsoft Corp (MSFT.O: Quote, Profile, Research) nor Yahoo Inc (YHOO.O: Quote, Profile, Research) wants to blink first in the software giant's proposed $41.7 billion takeover of the Web pioneer but as the gamesmanship drags on, archrival Google Inc (GOOG.O: Quote, Profile, Research), the merger's raison d'etre, is the biggest beneficiary.

Google Inc. raised the specter of Microsoft Corp. using its proposed $42 billion acquisition of Yahoo Inc. to gain illegal control over the Internet, underscoring the online search leader's queasiness about its two biggest rivals teaming up.

Yahoo Inc.'s board plans to reject Microsoft Corp.'s unsolicited $44.6 billion offer to acquire the Web giant, a person familiar with the situation says.

How much are Yahoo's volunteers worth? And how much less will Yahoo be worth if Microsoft scares them away? That's the question that should be at the center of talk about Yahoo's value — both as an acquisition for Microsoft and as good company to work for with.

Option investors bet heavily on Monday that Yahoo might strike a deal of some sort with Microsoft Corp, spurred on in part by pressure from activist shareholder Carl Icahn.

Microsoft has proposed an alternative deal for Yahoo, a complex transaction that would include just buying Yahoo's search business, rather than a full buyout, a person familiar with the discussions said on Monday.

Novell's and Microsoft's savings from "past glory" days enable them to pretend