March 15 (Bloomberg) -- Microsoft Corp., the world's largest software maker, may have opened the door to price negotiations with Yahoo! Inc. after the two companies met this week, making a deal more likely.

The software maker sent executives to talk with Yahoo officials on March 10, their first meeting since Yahoo rejected a $44.6 billion takeover bid, according to a person familiar with the situation, who refused to be identified because the talks are private.

The discussions may signal a thawing of relations between the companies and may make Microsoft more willing to pay ``a couple dollars more'' than the original $31 a share offer, Morningstar Inc. analyst Toan Tran said in an interview. Microsoft's other option is to nominate a slate of directors to dominate Yahoo's board.

``Yahoo's definitely softened its stance in engaging in these informal talks,'' said Chicago-based Tran, who recommends buying Microsoft stock and doesn't cover Yahoo. He doesn't own shares in either company. ``Previously, Yahoo wouldn't even come to the table with Microsoft.''

Yahoo rejected Microsoft's offer on Feb. 11, 10 days after the bid, saying it undervalued the company. Yahoo, owner of the most visited group of Web sites in the U.S., said last month that the online advertising market will grow to $75 billion by 2010.

Yahoo fell 79 cents to $26.71 yesterday in Nasdaq Stock Market trading, while Microsoft dropped 66 cents to $27.96. Yahoo traded at a 7.2 percent discount to the current $28.79 value of Microsoft's cash and stock offer, compared with a 5.5 percent discount yesterday.

Yahoo spokeswoman Tracy Schmaler declined to comment. Microsoft spokesman Frank Shaw didn't return a message.

Market Share

Microsoft said after the rejection that it reserves the right to take any steps needed to get its offer before Yahoo shareholders. Buying Yahoo would give the company second place in the Internet-search market in the U.S., with about a third of total queries. Google's share is almost 60 percent, according to the latest report from Reston, Virginia-based research firm ComScore Inc.

Yahoo engaged in talks with Rupert Murdoch's News Corp. about a combination to block the Microsoft bid, a person with knowledge of the discussions told Bloomberg News last month. That agreement would bring together Yahoo and MySpace, the most popular social-networking site, in a way that would let Yahoo remain independent, the person said.

Murdoch later told investors that he wouldn't ``get into a fight'' with Microsoft over Yahoo.

``Yahoo is kind of backed into a corner,'' said Morningstar's Tran. ``Yahoo is playing a very dangerous game with shareholder's money. Microsoft could always walk away and Yahoo stock could take quite a fall.''

To contact the reporters on this story: Zachary R. Mider in New York at zmider1@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: March 15, 2008 00:01 EDT