It’s been all over the news: Yahoo’s market value decreased and Microsoft is re-evaluating its offer, sources familiar with the situation reported on Friday, Reuters says. At the same time, The New York Times and Forbes also reported that Yahoo is planning on rejecting Microsoft’s offer as it continues to undervalue them, a person close to Yahoo said.

Yahoo Inc.’s chief executive Jerry Yang reportedly sent a letter to Microsoft at the beginning of this week saying, again, that their offer is undervaluing them, despite the fact that Yahoo’s value is set to be right now below Microsoft’s $44.6 billion offer in January this year.

But if Yahoo is unsatisfied with the first offer, a lower bid from Microsoft would make the situation even worse, and at the same time, it is hard to imagine Yahoo will actually manage to make a deal with somebody else but Microsoft.

Neither Yahoo, nor Microsoft representatives wished to comment on the speculations, as one of them continues to explore alternatives to the other one’s offer. “It is up to Yahoo’s board to engage in meaningful discussions with Microsoft,” a source told Reuters.

As the market deteriorates, so could Microsoft’s offer, which now is situated at about $42 billion cash (not quite what Yahoo shareholders would have expected).

Yahoo’s share as Web search engine has been on a downward trend since January, dropping 0.6 percent from January to February.

The initial offer made by Microsoft on February 1 was $31 a share, adding up to a grand total of approximately $44.6 billion but after a downfall in Microsoft’s shares, it is now worth about $42 billion, still making it, if finalized, the biggest-ever takeover in the high-tech industry.

On February 11, Jerry Yang rejected Microsoft’s bid saying that it undervalues the company. Yahoo asked for a $12 billion raise in Microsoft’s offer, which has not happened so far. Rumors have it that Microsoft already turned to Bear Stearns Cos. Services in the Yahoo situation.