"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," Microsoft chief Steve Ballmer said in his letter to Yahoo. No immediate comment was forthcoming from Sunnyvale-based Yahoo.
Sources, however, said that there is a possibility of Microsoft renewing its bid later this year if Yahoo can't bounce back from its current financial crunch. Had the deal gone through, Microsoft could have achieved a stronger foothold in its battle with Google, which is rapidly expanding into the software maker"s own turf with new Web-based applications. Yahoo has repeatedly said the company is not averse to a deal with Microsoft at a higher price.