Software giant Microsoft has been attempting to purchase Internet giant Yahoo! in hopes of leveraging the internet presence of Yahoo! in Microsoft's battle with Google.  The original offer for Yahoo! was $44 billion; however since this offer Microsoft has seen a revenue drop this last quarter which could greatly affect the software giant's ability to up the price again in hopes Yahoo! would accept.
Revenues at Microsoft were down a total of 6%.  This includes a 24% drop in revenue from the Windows Operating System alone.  Stock prices of both Microsoft and Yahoo! have decreased during the merger discussions. Microsoft's next move is unknown but there has been talk of potentially going directly to the Yahoo! shareholders with a buyout plan.
It is too early to tell how this will end, but Microsoft has made it known that it will try all available routes; up to and including a hostile takeover. Recent comments from Microsoft CEO Steve Ballmer and CFO Chris Liddell have mentioned that not acquiring Yahoo! is also an option. Whatever Microsoft's plan is, the longer this takes, the more competitor Google will likely use this to their advantage is obtaining both clients and employees, says Juan Carlos Perez of IDG.

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Microsoft's attempt to buy out Yahoo may never happen