"Microsoft made an 11th-hour offer to resolve this matter without litigating," the source said.
An announcement on the pending litigation, scheduled for 9 a.m. PT today, has been delayed pending the outcome of negotiations, the source said.
Representatives from Microsoft, a group of state attorneys general, and U.S. Assistant Attorney General Joel Klein are participating in the negotiations, according to the source.
No details on the nature of the last-minute offer from Microsoft were available, but the source said the offer "is intriguing. Everything is in limbo right now."