UPDATE 3-Microsoft poised to detail next moves on Yahoo-CEO

(Adds Microsoft likely to go hostile)

By Anupreeta Das and Eric Auchard

SAN FRANCISCO, May 1 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research) Chief Executive Steve Ballmer said on Thursday that walking away from a deal with Yahoo remained one of "three big options" the company is weighing and to expect an announcement shortly.

Neither side would comment on whether they were seeking a last-minute deal before Microsoft makes good on its threat to turn its unsolicited bid, currently worth $42.4 billion, into a hostile takeover battle.

The Wall Street Journal reported late on Thursday that Microsoft appeared to be leaning toward going hostile in its pursuit of the Internet company, citing people familiar with the matter. An announcement could come on Friday, the Journal said.

A Microsoft spokeman declined to comment.

But in a sign that Yahoo continues to resist Microsoft's embrace, a source familiar with discussions between Yahoo and Google Inc (GOOG.O: Quote, Profile, Research) said a partnership could come as early as next week. The non-exclusive partnership would involve Yahoo carrying Google advertising alongside Yahoo's Web search results.

Such a partnership would not preclude a deal with Microsoft, the source said.

Ballmer told employees during a regularly scheduled company Town Hall meeting that Yahoo is valuable as part of a strategy to beat Microsoft arch-rival Google, but there are limits on the price Microsoft is ready to pay.