The nail-in-the-coffin news sent Yahoo's stock price tumbling; it dropped to the $22 to $23 range; down about 12% since the beginning of the day.
The Yahoo announcement cited a June 8 meeting in which Microsoft "stated unequivocally" that the company wasn't interested in an acquisition.
Open to discussion
But a subsequent Microsoft announcement wasn't so unequivocal: "As stated on May 3 and reiterated on May 18, Microsoft was not interested in rebidding for all of Yahoo," it said. "Our alternative transaction remains available for discussion."
That alternative transaction refers to one in which Microsoft would buy Yahoo's search assets, a deal Yahoo isn't interested in doing.
In its statement, Yahoo shot down such a scenario: "With respect to an acquisition of Yahoo's search business alone that Microsoft had proposed, Yahoo's Board of Directors has determined, after careful evaluation, that such a transaction would not be consistent with the company's view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future and would not be in the best interests of Yahoo stockholders."
Yahoo, Google could still partner
Meanwhile, it seems Yahoo and Google are getting cozy. The blog TechCrunch reported that a deal would be announced at 4:30 p.m. EST. The Wall Street Journal called a Google-Yahoo deal "imminent."