A proxy fight may be in Microsoft's and Yahoo's near future, if reports today come to fruition. Rumors that secret renegotiations between Microsoft and Yahoo management are under way have been denied by Chairman Bill Gates, but analysts say that the threat of the proxy fight from Microsoft makes sense at this point.

For one thing, Microsoft would come out ahead financially after a proxy fight to secure approval of its offer to acquire Yahoo, compared to the cost of increasing its offer, which Yahoo CEO Jerry Yang has dismissed. For every dollar per share that Microsoft could increase its offer, it would pay another $1.4 billion, according to this Reuters piece on MSNBC.

Putting up a slate of directors for Yahoo's board and proxy fight would cost $20 million to $30 million, according to the New York Times piece that reported the plan. The structure of the Yahoo board means that all of the directors are up for renomination this year, which also makes the proxy fight an attractive option in the short term, but one that creates a potentially disastrous management situation for Microsoft and the acquired Yahoo in the long term.

Last week, analysts surmised that Microsoft would pay more, one way or another, to get this deal closed. Heck, it has the cash on hand and it's done it before. It could make a tender offer directly to shareholders, and there are definitely those who'd like nothing more than to say goodbye to the current Yahoo board and hello to Microsoft.

Meanwhile, some very vocal Microsoft investors are none too happy with the drop in value for Redmond's stock since the Yahoo pitch was made, and are telling Microsoft management to walk away, reports The Guardian.