With Yahoo deal's collapse, stymied Microsoft must find new online strategy

With its three-month pursuit of Yahoo at an end, Microsoft is back where it started: far behind Google, the undisputed online-advertising leader.

For several years, Microsoft has been striving for a bigger share of the billions of advertising dollars migrating online. Buying Yahoo would have gone a long way to making that happen, the company reasoned.

Now, after the companies could not agree on a purchase price, Microsoft has to chart a different course.

Chief Executive Steve Ballmer, in an e-mail to employees Saturday explaining his decision to withdraw the offer to buy Yahoo, said Microsoft has a strategy in place.

"Although the acquisition of Yahoo would have accelerated our ability to deliver on our strategy in advertising and online services, I remain confident that we can achieve our goals without Yahoo," Ballmer wrote.

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