"There's nothing definitive to say today," Ballmer reportedly told employees, according to the Silicon Alley Insider.

"We have a great plan and strategy and we have a long way to go. We are not number one and number one is a lot bigger than us. There may not be many people here that remember when we were a distant number 2 before. You gotta be willing to look outside of the box and Yahoo is $44 billion outside of our box. If Yahoo doesn't happen, there's a number of other things we'll look at."

The news comes a day after the Redmond, Wash.-based company's board of directors met and let Ballmer off the leash, giving him "broad discretion to either go hostile or abandon the Yahoo pursuit," The Wall Street Journal reported.

Microsoft's chess game with Sunnyvale, Calif.-based Yahoo has ranged from its silence after Yahoo failed to respond to its Saturday deadline to accept or decline its $31 per share offer to talks that the company was willing to ante up more money, to Ballmer squaring his shoulders and willing to walk away from the deal entirely.

According to The Silicon Alley Insider, Ballmer held a town hall meeting today to let employees know what's going on with Yahoo.

"[We] missed the deadline but we're in the process," Ballmer reportedly said. "I report nothing. I got nothing to say today. We've got basically the three big options in front of us. There's the friendly deal, there's an unfriendly deal, and the third path is simply to walk away. Given it's just a part of a strategy--if neither of those look good, we walk away. It makes sense at the price we proposed and I think it's a good deal for Yahoo shareholders. It's a huge premium it's one of the largest valuations."

When an employee reportedly asked Ballmer what made Yahoo so attractive to Microsoft, he reportedly said that although the company has talented employees, it is not "the leading player," and that there are "structural things in the industry that make it hard to make rapid progress."

"We need to gain scale. The world is rooting for us. The world hopes that there's a very strong company that's not the number one guy. We're going to work that strategy with Google, with Yahoo or without Yahoo.

"Yahoo's not a strategy, it's a part of a strategy. We're interested to pay for it at some level and beyond that level we're not willing to pay for it. I know exactly what I think Yahoo is worth and I won't go a dime above."