Well, there are two ways of putting this – one is that the two sides couldn't reach an agreement, whereas the other is that Yahoo just realized what they've done. Apparently, after Microsoft withdrew the bid, Yahoo shares fell by 20%, but closed at $24.22, which is a 15.6% drop.

Yahoo Inc. Chief, Jerry Yang, now says that they’ve been seeking common ground when the deal was abruptly ended. However, anyone who’s been following this situation closer will know that Yahoo has been on many “common grounds,” but not on Microsoft’s.

Yahoo most certainly has to get their act straight, and analysts are even saying that Yahoo could face legal actions from their shareholders, since some of them already publicly declared discontent with Yahoo Chairman's decisions. Microsoft is not keen on doing the initial plan B, where they would move toward a hostile takeover, because Yahoo's chairman would probably make necessary steps to make this an undesirable acquisition.

More here.