Microsoft said to be evaluating Yahoo bid

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The news, first reported by Reuters, sent Yahoo shares down more than 5 percent in extended trade.

After weeks of silence, recent comments from various sources to journalists suggest the software maker is hardening its stance and pushing Yahoo for action.

The sources told Reuters that Yahoo has lost key personnel, making the company less valuable, while generous severance packages it handed out to executives and full-time employees in the case of a takeover have made it more expensive.

Yahoo's board of directors has rejected Microsoft's offer, made on January 31, saying it "substantially undervalues" the company. The cash-and-stock bid initially valued Yahoo at $44.6 billion (22.4 billion pounds) , but is currently worth about $42 billion.

Yahoo and Microsoft representatives declined to comment.

Yahoo has said it is exploring strategic alternatives, but no credible option has publicly emerged so far, narrowing its choices even as Microsoft refuses to raise its bid.

Instead, Microsoft has been repeatedly trying to engage Yahoo's board in discussions, these people said, declining to be named because they are not authorized to speak on the matter.

"It is up to Yahoo's board to engage in meaningful discussions with Microsoft," one person said.

In the meantime, the market has deteriorated and changes in Yahoo's business may have dragged down its value below what it was when Microsoft made its bid, these people said.

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