Microsoft Says They’ll Pay More, increasing Yahoo! bid to as much as $33/share (from $31/share)

If I'm reading this correctly, I can't believe Microsoft blinked. All the talk of proxy fights and deadlines and new boards...and now this? I'm not much of a businessman but raising your offer before the other side makes a counter-offer, and after the "deadline" you tried to impose has passed with no effect at all, just makes you look real desperate. If I were Yahoo I would see no reason at all to come down to $33 from whatever they are targeting.

A higher offer was the second most likely scenario after a hostile takeover according to http://blog.pmarca.com/2008/04/if-microsoft-go.html