According to the Journal's sources:

-- The two companies are divided on price, with Microsoft perhaps willing to raise its offer to $32 or $33 a share, while major Yahoo shareholders and the company's leadership want a price in the high $30 range.

-- Microsoft has been heavily lobbying major Yahoo shareholders, with the personal involvement of CEO Steve Ballmer and Alan Schwartz, the CEO of Bear Stearns, brought in as a special adviser on the deal.

-- Yahoo continues to pursue a deal with Time Warner's AOL. Time Warner announced today it's spinning off its cable business.

-- The Microsoft board is waiting to hear Ballmer's recommendation. The Microsoft boss, in his eighth year commanding the company, is facing the most important decision of his career. "The Microsoft CEO has appeared to both favor raising his bid price for Yahoo and walking way from the deal together, say people familiar with his thinking," the Journal reports.

-- The Journal's story in today's paper said Microsoft was weighing whether to unveil a slate of candidates to replace Yahoo's board of directors in what would be the first salvo of a hostile takeover.

Recall that the deadline Microsoft set for Yahoo to make progress toward an agreement passed this weekend. Microsoft CFO Chris Liddell said last Thursday the company was considering its options, including a hostile takeover and dropping the deal, and would "provide updates as appropriate next week."

Update, 7:20: The Journal posted another story this evening saying Microsoft's board meeting has concluded without reaching a final decision.