By Scott Moritz

In the absence of a bidding war for Yahoo! (YHOO), Microsoft (MSFT) stands pat on its original $42 billion buyout offer.

Seeing no reason to bid against itself, Microsoft looks willing to wait it out, according to a report Tuesday in The Wall Street Journal.

The news comes two weeks after Yahoo argued that it deserved a higher bid in a 37-page presentation that highlighted strong cash flow projections, the comparative value of other Internet deals and the online ad clout the company has here and abroad.

Yahoo shares are up more than 10% since the plea for a higher offer was made public, largely because the company’s financial outlook appeared solid, alleviating concerns that the Net giant was feeling the effects of an economic slowdown.

But no white knight has appeared with a sweeping offer to carry Yahoo away for billions more. Chats with other players like Time Warner (TWX) (the parent of Fortune and CNNMoney.com) and News Corp. (NWS) have lacked the full package that Microsoft offered.

“We still expect Microsoft to raise its bid at the eleventh hour, when the companies are already deep in negotiation, but there is no reason to do it before then,” writes blogger Henry Blodget.

Microsoft seeks Yahoo’s online assets to help it counter the growing threat from Google (GOOG). The Web search giant has targeted Microsoft’s core PC application business with free, often ad-supported network-based software.

By Michal Lev-Ram

After over a year of development, testing and refining, online video service Hulu launches Wednesday and viewers will get to chance to see if it lives up to all the hullabaloo.

A joint venture between News Corp.’s Fox (NWS) and NBC Universal (GE), Los Angeles-based Hulu says it aims to bring together the widest selection of free, “premium” videos on the Web. But unlike Google’s YouTube (GOOG), where unauthorized clips often end up, Hulu’s content is the result of pre-established partnerships with entertainment companies like Lionsgate (LGF) and Sony Pictures Television.

When plans for the then-unnamed site were announced last year, many ridiculed the idea, saying “old media” doesn’t get the Internet. But when Hulu gave select viewers a look at the site, some critics changed their tune. The company received rave reviews for its site’s ease-of-use and simplicity.

The site features more than 250 television shows and 100 full-length feature films from Fox and NBC as well as content from companies like Warner Bros. Television Group (owned by Time Warner (TWX), the parent company of Fortune and CNNMoney). Clips of other shows — including Saturday Night Live — will also be available on the site.

So far Hulu has failed to sign on two other big television networks: ABC (DIS) and CBS (CBS).

Still, industry insiders say the marketing potential of Fox and NBC — makers of hit shows like “Deal or No Deal” and “24″ — is huge.

“The networks have the power to do big things with online video,” says Morgan Guenther, CEO of interactive media startup AirPlay and the former president of TiVo. “If they do it right this thing will definitely have legs.”

Unlike YouTube, Hulu has an ad network already up and and working at launch time, though its lineup of advertisers is still limited. Hulu is experimenting with letting viewers choose which commercials they watch, and doesn’t let them fast forward through ads.

But like its rival YouTube, Hulu is also encouraging viral distribution. People can edit shows down to a few seconds and then e-mail those clips to friends. They can also embed videos on blogs and their MySpace or Facebook pages.