Microsoft announced an unexpected 44.6-billion-dollar bid for Yahoo Friday, as a latest move by the software giant to challenge Google's dominance of the lucrative online search and advertising markets.(Xinhua/Reuters File Photo) Photo Gallery>>>

The Yahoo headquarters in Sunnyvale, California.(Xinhua/AFP File Photo) Photo Gallery>>>

    LOS ANGELES, May 3 (Xinhua) -- Microsoft announced Saturday it is withdrawing its offer for Yahoo in a surprise that stunned many industry analysts and Wall Street investors.

    In a letter to Yahoo Chief Executive Jerry Yang, Microsoft CEO Steve Ballmer said his company decided to give up its acquisition efforts after the negotiations between the two companies got bogged down.

    "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," Ballmer said.

    Microsoft was willing to pay 47.5 billion dollars, or 33 dollars per share, up from the bid's current value of 29.40 dollars per share. But Yahoo demanded at least 53 billion dollars, or 37 dollars per share, the letter said.

    "Despite our best efforts, including raising our bid by roughly five billion dollars, Yahoo has not moved toward accepting our offer. Clearly a deal is not to be," Ballmer said.

    Microsoft had set April 26 as the deadline for Yahoo to respond to Microsoft's offer, or it was to launch a proxy fight to take control of Yahoo's board of directors. But this week passed with no escalation of the takeover fight, which has been dragging on for three months.

    Microsoft also said it doesn't intend to mount a battle to replace Yahoo's board of directors, although some observers had thought its bid would turn hostile in the absence of a deal.

    Yahoo had repeatedly rejected Microsoft's offer as being too low. It has also aggressively sought alternatives such as a tie-up with Time Warner Inc.'s AOL unit and a partnership with rival Google Inc.

    Ballmer said last week that Microsoft would not pay "a penny" more than the company thought Yahoo was worth, and it seems he kept his word.

    In the letter, Ballmer also expressed disappointment with Yang that the deal had fallen through, but said Microsoft was prepared to go it alone.

    "By failing to reach an agreement with us, you and your stockholders have left significant value on the table," he wrote.

    Meanwhile, Yang responded in a statement posted on the Yahoo website, saying that Yahoo is able be focus on an important transition in its history now that "the distraction of Microsoft's unsolicited proposal is behind us."

    Investors will be watching to see how Yahoo's stock performs on Monday. It had jumped about 50 percent since Microsoft announced its proposal to buy Yahoo in February.

    However, industry analysts said that although Ballmer told Yangthat "clearly a deal is not to be," Microsoft's withdrawal of its bid doesn't necessarily end all hope that the two companies could unite.

    Observers have predicted that Microsoft could withdraw its bid as a bargaining tactic, in hopes that Yahoo's stock would plunge enough that its management team would finally agree to do a deal on Microsoft's terms.

    Microsoft's effort to buy Yahoo is seen widely as the software giant's latest attempt to challenge Google's dominance of the lucrative online search and advertising markets.

Microsoft keeps silence on Yahoo deal after deadline passes

    LOS ANGELES, April 29 (Xinhua) -- U.S. software giant Microsoft Corp. Tuesday continued to keep silence on its bid to acquire Yahoo Inc., three days after the deadline Microsoft had given to the major internet search engine to come to an agreement.

    There has been no word from both in the past few days on the potential deal worth some 44.6 billion U.S. dollars, as observers speculate that Microsoft Chief Executive Steve Ballmer is trying anew tactic in his battle to take over the Silicon Valley company.  Full story

Google: Deal with Yahoo is not a merger

The Google booth is seen at the 2006 Consumer Electronics Show in Las Vegas in this Jan. 5, 2006 file photo. (Xinhua/Reuters File Photo) Photo Gallery>>>

    BEIJING, April 27 -- Google Inc believes regulators would not bar a potential deal with Yahoo Inc because it would be "non-exclusive" and falls short of an outright merger, claim sources familiar with Google's strategy.

    Yahoo is exploring alternatives to Microsoft Corp's 42.7 billion U.S. dollars takeover offer which the Web pioneer has rejected for being too low. Full story

Yahoo: Microsoft's offer must be raised

Pedestrians walk past the Time Square Yahoo sign in New York April 7, 2008. Yahoo! Inc, responding to Microsoft Corp's weekend threat of a proxy fight that could result in a lower takeover price, said the current 44.6 billion U.S. dollars offer must be raised before any merger can take place. (Xinhua/Reuters Photo) Photo Gallery>>>

    BEIJING, April 8 -- Yahoo! Inc, responding to Microsoft Corp's weekend threat of a proxy fight that could result in a lower takeover price, said the current 44.6 billion U.S. dollars offer must be raised before any merger can take place.

    "We will not allow you or anyone else to acquire the company for anything less than its full value," Yahoo said on Monday in a letter to Microsoft Chief Executive Officer Steve Ballmer. Last Saturday, Ballmer gave Yahoo three weeks to reach a deal or face a proxy battle. Full story