The company is recounting the shareholder vote for its board of directors after discovering that a tabulating firm failed to register the opposition of a major investor.

The Texas billionaire unloads 10 million shares of the company, citing frustration over the way management handled the Microsoft situation.

Microsoft CEO Steve Ballmer says the company is committed to heavy investment in the search business, but says there's "nothing under discussion" with Jerry Yang's company.

Yahoo's decision to appoint activist investor Carl Icahn and two of his nominees to its board defuses a proxy battle showdown next week and makes an immediate deal with one-time suitor Microsoft less likely.

The company holds to its 2008 outlook, despite a drop in second-quarter earnings. and says it is will continue to look at possible transactions, says CEO Jerry Yang.

A flurry of last-minute talks between the heads of the software and Internet giants preceded Saturday's decision by Microsoft to end its effort to buy Yahoo. But the two sides remained apart on price, even though Microsoft was willing to edge up and Yahoo was willing to give slightly. But that wasn't the only stumbling block.

Yahoo is unlikely to get into a bidding war over AOL with Microsoft because if Microsoft gets in the way, Yahoo could instead renew talks over News Corp's Web properties, a person with knowledge of the plans said Thursday.

With Microsoft now walking away from its unsolicited bid for Yahoo, new details are emerging as to just how bizarre these negotiations -- or lack thereof -- have been since Microsoft first made the deal public three months ago.

A chronology of events leading to Microsoft's  decision to abandon its offer for Web search and advertising competitor Yahoo:

The following is the letter sent by Microsoft CEO Steve Ballmer to Yahoo CEO Jerry Yang

"We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole," said Microsoft CEO Steve Ballmer.

This is a negotiation. Think about it: if you were selling your house, would you take the first offer? This is much the same, with six or seven extra zeroes.

Microsoft's proposed acquisition of Yahoo would marry the world's biggest software maker with a leading Internet media company, shaking up the online market.

One of the first questions that Jerry Yang and his top lieutenants pondered after he became chief executive of Yahoo last summer was whether the company could remain independent.

Google Inc fired back Sunday at Microsoft's $44.6 billion bid to acquire Yahoo, accusing Microsoft of seeking to extend its computer software monopoly deeper into the Internet realm.

Microsoft's proposed acquisition of Yahoo would marry the world's biggest software maker with a leading Internet media company, shaking up the online market.

I've gotten ahold of Microsoft CEO Steve Ballmer's internal memo he emailed to the troops this morning about his plans to spend $45 billion in a hostile bid for struggling search stalwart Yahoo. (Thanks for sending. You know who you are!)

Microsoft's take-out play for Yahoo is a stunning move by the world's largest software maker, even though rumors of a deal have been swirling for the better part of a year.