UPDATE 1-Microsoft prefers own Yahoo bid among options-source

(Adds sources on Time Warner, News Corp, details, byline)

By Daisuke Wakabayashi and Kenneth Li

SEATTLE/NEW YORK, April 11 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) wants to stick with its original takeover offer for Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz), but is not ruling out News Corp joining its bid or other options, a source close to the company said on Friday.

Separately, a source familiar with the matter said News Corp (NWSa.N: Quote, Profile, Research, Stock Buzz) continues to talk directly with Yahoo on reaching a deal without Microsoft. The source declined to provide details on what a potential deal structure would look like.

The source close to Microsoft said the company's preference all along has been to retain the original deal structure that would involve paying $31 per share in cash and stock to acquire Yahoo. But Microsoft has not ruled out bidding with partners.

Earlier, the Wall Street Journal, which is owned by News Corp, reported that people close to Microsoft said the software maker plans to pursue Yahoo alone rather than with News Corp, which had held talks with Microsoft on a joint bid for Yahoo.

The Journal also said Yahoo's board of directors met on Friday to assess their options, including deepening their negotiations with Time Warner Inc's (TWX.N: Quote, Profile, Research, Stock Buzz) AOL on a deal to merge Yahoo and AOL, but that no decisions were reached.

Spokesmen for Microsoft, News Corp, Time Warner and Yahoo were not immediately available to comment.

The newspaper's Web site cited unnamed sources as saying that Time Warner had been expecting Yahoo's board to move closer to backing an AOL deal and that Yahoo's delays suggested that the company was hesitant to proceed.