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Finally it looks like Steve Ballmer and his team found too much of trouble running behind Yahoo for the past three months. Microsoft considers Yahoo to be its golden goose, and it feels that it will lay golden eggs in the future of online advertising.. I had written a post detailing What A Combined Microsoft Yahoo Looks Like weighing all the pros and cons if this deal went through. Somehow Yahoo managed to push Microsoft to such an extent that it had no choice but to accept defeat.

Now that Yahoo is staying on as an independent company, Jerry Yang and his team have some important tasks at hand. Let me reserve what exactly do they need to do for another post and focus on the ramifications of the breakout of this deal.

Microsoft issued a statement here

“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.

Yahoo! responded by issuing a statement

“From the beginning of this process, our independent board and our management have been steadfast in our belief that Microsoft’s offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view. Yahoo! is profitable, growing, and executing well on its strategic plan to capture the large opportunities in the relatively young online advertising market. Our solid results for the first quarter of 2008 and increased full year 2008 operating cash flow outlook reflect the progress the company is making.”

Looking at the two statements, it is clearly evident that Microsoft sounds like a looser while Yahoo sounds like a clear winner either way you look at it. Considering that Yahoo already has a search advertising deal with Google, Yahoo should now focus on improving the services and increase the ad revenue across the board.

With the Microsoft hurdle out of the way, I feel that there are more important Google and Yahoo tie ups on the way. This is just the beginning and from now on, Google has got some interesting times ahead, and it will be worth watching how Google dodges the challenges being thrown at it.

Look out for a post soon, wherein I’ll be detailing as to what Yahoo needs to exactly do to stay clear and profitable in the future. I’m no guru but I love Yahoo and would never want it to go into the evil hands of Microsoft.

What do you think about the fall through of this deal? What do you think is going to happen to Microsoft, Yahoo and Google as individuals? How do you think the Internet will react to this? Pitch in your opinion by dropping a comment.

I never wanted to this deal to go through and it looks its finally happening. Yay! I can’t be more happy for Yahoo than am right now .