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As Microsoft weighs its acquisition options with Yahoo, it’s interesting that its board is pretty much leaving the decision to CEO Steve Ballmer. Could it be that Ballmer’s next move be the one that decides his future at Microsoft?

Ballmer really doesn’t face an easy option when it comes to his company’s takeover bid with Yahoo. There’s not a "no brainer" decision that he can opt for, and walk away with everyone smiling. Consider his choices:

1. Offer more for Yahoo. Microsoft has indicated it might increase its bid to $33 a share, but that’s still off from the $35-37 number that Yahoo (and its shareholders) appear to want. Offering more would bring a swift conclusion to the protracted negotiations, but down the road he might find stakeholders questioning whether he overpaid or not.
2. Back out completely. Microsoft is struggling with its online channels–hence the bid for Yahoo in the first place. If he pulls out now, Yahoo would claim victory, and Microsoft would be in a worse position than before–struggling with online AND the sting of failing to find a white knight.
3. Make a hostile bid. Ballmer could decide that he has Yahoo’s valuation correct and launch a hostile bid for the company. That could get messy, reduce employee morale of both companies, and create a big distraction for Google to take advantage of.

I’ve had the privilege of meeting with Steve Ballmer in the past–we discussed MSFT’s search marketing and opportunities to compete with Google–and I write this post with the vague possibility that I may bump into him during my visit to Redmond today. Despite the silly faces and rumored antics (chair throwing anyone?) he’s incredibly smart and comes across as a man that can make a decision that others will want to follow.

The question is, what decision will he make with Yahoo? Either of the three choices have the capacity of being the perfect, or worst, decision for Ballmer. If he can pull it off–whichever one he decides on–he’ll secure his legacy at Microsoft. If he can’t, it might be one that he never fully recovers from.

Which option would you choose? Do you see a fourth option? Maybe Ballmer will read this post, so offer up your advice.

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