The Wall Street Journal is reporting that senior execs at Microsoft and Yahoo have been holding take-over talks this week.
But sources close to the companies have revealed that no decision has been made, and that discussions have reached a stalmate.
The newspaper says that, despite rumours to the contrary, Microsoft is not prepared to raise its $42 billion offer for Yahoo; and that Yahoo's execs will not enter into formal talks until the offer is increased.
Reuters reports that the meeting this week was the second of its kind, without the presence of bankers, between top executives at both companies and took place near Yahoo's headquarters in Sunnyvale.
Both Microsoft and Yahoo are not commenting on this latest story.