Microsoft offered $33 a share, and Yahoo countered with $37 a share. The talks went nowhere from there. Microsoft was also concerned with the lack of friendly integration and other major strategic problems, including the email monopoly that would arise from the merger of the two companies, as well as any outsourcing ad deal Yahoo might sign with Microsoft archrival Google before Microsoft completed an acquisition.
At several points during the last few weeks, Yahoo execs had asked for over $40-a-share to consummate the deal, a price which Microsoft rejected. Yahoo’s Yang subsequently called Ballmer with the lower $37 price, which was discussed today.
$33 had been a good deal for Yahoo as it was a good premium. The acquisition would had improved the morale of Yahoo's staff and also prop up their stock price even further. With the acquisition being called off, Yahoo would definitely have a tougher time ahead and its stock price should dive when its traded tomorrow.