Feb. 6 (Bloomberg) -- Yahoo! Inc. Chief Executive Officer Jerry Yang, who said today he's weighing alternatives to Microsoft Corp.'s $44.6 billion bid, may find he has none.

The world's second most popular Internet search engine has a ``wide range'' of options after Microsoft's $31-a-share offer, Yang said today in an e-mail to his 14,000 employees. He urged them to stay focused as Yahoo pursues its ``transformation strategy.''

Yang, 39, may seek an alliance in search technology with bigger rival Google Inc., strike a partnership with a social- networking site such as News Corp.'s MySpace, or look for another buyer, such as Rupert Murdoch's News Corp., analysts said. Those options probably won't pan out, said Andrew Frank, a New York- based analyst at research firm Gartner Inc.

``They're going to have difficulty finding another suitor to pay that kind of premium,'' Frank said in an interview. ``Odds are in favor of them acquiescing.''

Yang has resisted letting go of the company he co-founded in 1995 as a graduate student at Stanford University. Initially a way to help people find their favorite places on the Web, Yahoo became the most-visited U.S. Internet site by combining search, news, sports and finance in a single place. Yang carried the title of chief Yahoo for 12 years until he replaced Terry Semel as CEO in June.

Microsoft's Feb. 1 offer was 62 percent more than Sunnyvale, California-based Yahoo's closing share price the day before. Yahoo fell 41 cents to $28.57 at 4 p.m. New York time on the Nasdaq Stock Market. Redmond, Washington-based Microsoft lost 55 cents to $28.52.

Battling Google

Microsoft is pursuing Yahoo to unite the second- and third- biggest Web search providers and compete with rival Google, which dominates that market. Microsoft predicts that the market for online ads will almost double to $80 billion by 2010.

Yahoo investors, who saw the value of their holdings tumble by half in the two years before the bid, may prefer selling to Microsoft than taking on Google as an independent company, according to analysts including Frank. Even if Yang opposes the deal, he and co-founder David Filo control less than 10 percent of Yahoo's outstanding stock.

Yang said he's heard from friends, colleagues and people in the industry about the need to do what's best for the company and for shareholders.

``I promise you the board is going to do that,'' he said in the e-mail.

Investor Confidence

Finding a better bid or forming an alliance might help Yang regain investor confidence in his turnaround plan or attract a higher offer from Microsoft, Stanford Group Co.'s Clayton Moran in Boca Raton, Florida, said this week. Yahoo rejected advances from Microsoft last year.

While a search and advertising partnership with Google is an option, it would face stiff regulatory scrutiny, Moran said today in an interview with Bloomberg Television.

``Given that Google would have such a big share of the search market, it probably wouldn't get approved,'' he said.

Together, Microsoft and Yahoo have a combined 32.7 percent of the U.S. Web search market, trailing Google's 58.4 percent, according to December data from Reston, Virginia-based researcher ComScore Inc.

Moran said earlier this week that Yahoo may also solicit rival offers from News Corp. and Comcast Corp. Other analysts say the company may try to form a partnership with a social- networking site like News Corp.'s MySpace.

News Corp.

News Corp. isn't interested in bidding for Yahoo, Murdoch said on a Feb. 4 conference call. MySpace, the most-popular social site, has an advertising deal with Google.

Comcast, the largest U.S. cable-television provider, is dwarfed on the Web, ranking 13th in the market for graphical, or display, ads, according to ComScore. Comcast spokesman John Demming declined to comment.

No other potential suitor can rival the $21.1 billion in cash and short-term investments that Microsoft had as of Dec. 31, a figure that is more than double the combined cash of Time Warner Inc., News Corp. and Comcast. Even Microsoft said it would probably have to borrow money for the first time to finance the Yahoo deal.

A higher bid from Microsoft is the most likely scenario because of the company's commitment to expand in the online advertising market, Citigroup analyst Mark Mahaney wrote in a note to clients today.

``It's reasonable to assume that Microsoft might be willing to increase its offer,'' Mahaney said. The San Francisco-based analyst advises investors to hold the stock.

To contact the reporters on this story: Ville Heiskanen in New York at vheiskanen@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net;

Last Updated: February 6, 2008 16:13 EST