UPDATE 3-Microsoft evaluating Yahoo bid -sources

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By Anupreeta Das

SAN FRANCISCO, April 4 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) is evaluating its bid for Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) because the Internet company may have lost value since Microsoft made its offer, people familiar with the matter said on Friday.

The news, first reported by Reuters, sent Yahoo shares down more than 5 percent in extended trade.

After weeks of silence, recent comments from various sources to journalists suggest the software maker is hardening its stance and pushing Yahoo for action.

The sources told Reuters that Yahoo has lost key personnel, making the company less valuable, while generous severance packages it handed out to executives and full-time employees in the case of a takeover have made it more expensive.

Yahoo's board of directors has rejected Microsoft's offer, made on Jan. 31, saying it "substantially undervalues" the company. The cash-and-stock bid initially valued Yahoo at $44.6 billion, but is currently worth about $42 billion.

Yahoo and Microsoft representatives declined to comment.

Yahoo has said it is exploring strategic alternatives, but no credible option has publicly emerged so far, narrowing its choices even as Microsoft refuses to raise its bid.