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Why Ballmer Bailed on Yahoo

According to consultant Jeffrey F. Rayport, there are five reasons Microsoft's chief gave up on his bid for Yahoo, including its cost and its not making sense
Microsoft CEO Steven Ballmer.
Microsoft CEO Steven Ballmer. David Hecker/AFP/Getty Images

It's not every day a titan of industry eats humble pie—at least not in public. But Steve Ballmer, Microsoft's CEO, did just that this week, climbing down from his $45 billion bid to acquire Yahoo!.

When Microsoft (MSFT) announced the deal in February, Ballmer hailed it as "the next major milestone in our companywide transformation to embrace online services, search, and advertising." With global online ad revenue projected to double to $80 billion by 2010 from last year's $40 billion, he wanted a bigger piece of the pie. The key was to bag Yahoo (YHOO), the once-celebrated Internet pioneer, still a top-three Web destination, and the No. 2 player in search after Google (GOOG).