The software producer could restart it's attempt to takeover the Internet services company, if it's stocks will drop at the stock exchange.

The world's largest software producer, Microsoft, dropped, for the moment, it's intention to takeover Yahoo!, after three months of negociations, according to Reuters. The two parties had not reach an agreement regarding the transaction's value.

Analysts say Yahoo has overplayed its hand and they expect the Web pioneer's shares to fall as much as 30 percent to $20 levels when the stock exchange trading resumes on Monday. The stock rose nearly 7 percent to $28.67 on Friday on hopes of an agreement between Microsoft and Yahoo. Microsoft's offer was for $33 a share, but Yahoo would not lower its demand below $37. The software company initially bid $31 per share for Yahoo more than three months ago.

The sofware giant wanted to buy the web services company to better compete with Google, which is "ruling" the web services market, especially in on-line advertising. This sector was estimated to 40 billion dollars in 2007, and by 2010 it's predicted to double it's value.

Yahoo! conditions do not make sense for Microsoft

The takeover offer withdrawal was communicated to the Yahoo! boss, Jerry Yang, trough an open letter sent by Microsoft's general director, Steve Ballmer. "In spite of our efforts, and our offer increase, Yahoo! hasn't decided yet. 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", writes Ballmer.

Also, the Microsoft boss announced that they have not passed to plan B, to takeover Yahoo! by force, after direct negociations with the shareholders, because Yang had already made "certain steps" - partnerships with different companies - that would of turned the company into an undesirable target for Microsoft. Yahoo! officials plead that Microsoft's offer was to small.

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Analysts think that Yahoo! is facing a difficult situation, the company is incapable to cut Google's advantage. They expect the company's stocks to drop today, even with 30%, because Yahoo! treated "superficially" Microsoft's reasonable offer.

"I'm shocked Yahoo wasn't more reasonable. The stock will probably go down at least $5 on Monday." said the manager of an investments fund that is a sharholder at both comapanies. In these conditions, Microsoft could follow the Oracle Corporation example, that, after failed negociations with BAE Systems, withdrew it's offer in October 2007. Following this action, BAE Systems stocks dropped by 7%, and the management accepted the offer in January 2008.