Microsoft 'may ditch Yahoo bid'

Software giant Microsoft today threatened to dump its bid for Yahoo if the search engine continues to play hardball, saying the target should forget "unrealistic expectations" of a better deal.

Chief financial officer Chris Liddell said: "Alternatives clearly include taking an offer to Yahoo shareholders or to withdraw our proposal and focus on other opportunities."

Liddell also urged Yahoo to make up its mind fast. If no deal is reached by this weekend, Microsoft will reconsider its offer and reveal new plans next week.

Microsoft plans to muscle its own people on to the Yahoo board and ram through the deal, now worth $44 billion (£22.2 billion).

Disappointing third-quarter results today suggested Microsoft badly needs to win the Yahoo deal. Losses on its online business widened to $228 million, net profit dropped to $4.39 billion from $4.93 billion a year ago and revenue was little changed at $14.5 billion.

The company warned it may miss analysts' estimates as sales of its Windows operating system sank 24%.