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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.

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The Wall Street Journal believes that Yahoo! will decline the $44.6 Billion Offer made by Microsoft to acquire it tomorrow. Should this happen tomorrow, it might set some wildfires tomorrow, as this would probably be considered as a bold move by Yahoo.

Yahoo has said that it will not consider any offer made by Microsoft under 40$ a share. Over a series of meetings, the Yahoo board believes that this offer seriously undermines the true value of Yahoo. If at all Yahoo pushes for atleast 40$ a share, this would mean another 30% premium for Microsoft, taking the potential bid to about 60$ billion.

The timing of Microsoft’s Offer made one thing very clear and that was that it is trying to buy Yahoo for cheap. Looks like the Yahoo Board have decided to put up a bold face, and have decided to raise the bid price beyond the 40$ mark. Also the original Microsoft offer on February 1st has itself lost value, as the bid was half cash and half stock, and Microsoft’s Stock price has fallen nearly 13% in this period.

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