Microsoft is expected to make its next move in the three-month-old takeover standoff with Yahoo Inc. as early as Wednesday, as the two sides have failed to reach any negotiated acquisition deal.

One option Microsoft has weighed is nominating a proxy slate of directors to replace Yahoo's board, while waiting to put any acquisition offer directly to Yahoo shareholders, say people familiar with the matter.

Such a move could effectively delay Microsoft's fixing any firm new price on its offer for Yahoo for the time being, allowing Microsoft to step back from its $42 billion bid for the Internet company while keeping the option of later going directly to Yahoo shareholders with a hostile acquisition offer. It would represent a largely unanticipated middle path for Microsoft between walking away from its bid and pushing forward an aggressive hostile-takeover campaign.

It isn't clear whether Microsoft will adopt such a maneuver as its final approach in the deal standoff, and any decisions by the company could change between now and when it goes public with its approach. But people close to the software titan say such an approach has been among those on the table.

A Microsoft spokesman declined to comment.

Microsoft has said it would announce its next move in its pursuit of Yahoo this week, and the two sides haven't had any formal negotiations since a deadline Microsoft set for going hostile passed Saturday, say people familiar with the matter.

A central issue dividing them has been price, with Yahoo saying that Microsoft's cash-and-stock offer, valued at $29.12 a share as of Tuesday's market close, "substantially undervalues" it. Some major Yahoo shareholders have signaled they want closer to $35 a share. Some have suggested they wouldn't back Microsoft in a hostile acquisition effort unless it raised the offer above its $31 a share value when initially extended Jan. 31. Yahoo shares were up 3.5% to $27.36 at 4 p.m. in Nasdaq trading Tuesday.

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