Microsoft's deadline to Yahoo for accepting its offer has expired silently without comments from either side. Yahoo is apparently not willing to accept the offer of $31 a share, arguing that it undervaluates the company. The initial offer made by Microsoft on February 1 was $31 a share, adding up to a grand total of approximately $44.6 billion but after a downfall in Microsoft’s shares, it is now worth about $42 billion, still making it, if finalized, the biggest-ever takeover in the high-tech industry.

Jerry Yang rejected Microsoft's bid saying that it undervalues the company. Yahoo asked for a $12 billion raise in Microsoft’s offer, which has not happened so far. It is common knowledge that Yahoo has been searching for a backup option to Microsoft’s offer, discussing different partnership scenarios with Google, AOL and the News Corporation. However, no deal has been struck or announced.

Microsoft gave an ultimatum to Yahoo in a letter sent on April 5, stating that if the two companies will not begin negotiations on a definitive agreement within the next three weeks, they will take the case directly to the shareholders and start a proxy contest to elect a slate of director for the Yahoo Board.

Microsoft’s mission to take over the Yahoo Inc Company can be better understood now as reports show a below the target profit and a small decrease in share prices.

Apparently, Microsoft’s core business, the globally known Windows, is beginning to slow down, bringing revenues in its client unit to $4 billion from last year’s $5.3 billion. One of the main issues is the slow adoption rate of Microsoft’s newest operating system, Vista, which presents some low-interest new features for the majority of users. The new interfaces need some time to get accustomed to and the incompatibility of Office 2007 documents also causes problems.

The business division was also below the target. The company’s developers and analysts expected revenues of at least $4.8 billion and the reports showed $4.7 billion.

Last month, Microsoft’s Chief Software Architect Ray Ozzie said the company is not in a hurry to merge its technology platform to that of Yahoo. Ozzie commented in an interview with the Financial Times that “technology companies, if they dive in and just smash things together for smashing them together’s sake, it’s reckless, it’s just simply reckless,” adding that Yahoo has its own technologies and corporate culture.

At the same time, Ozzie declared himself optimistic that Microsoft will be able to achieve its main goals if the deal with Yahoo will materialize, as long as they will focus on giving users and advertisers the same experience, rather than rushing into getting financial benefits from the deal.