By John Timmer
June 12, 2008 - 03:17PM CT

Microsoft's attempts to buy Yahoo! outright came to an end about a month ago, when Yahoo! management rejected a final offer of $33 a share. But there were many indications that the deal was simply pining for the fjords, as financier Carl Icahn attempted to replace Yahoo! management with executives who would take the money and run, and rumors circulated of a more limited agreement between the companies.

Now, Yahoo! is stating that its talks with Microsoft have broken down entirely. The statement says that Microsoft's final offer for Yahoo! was taken off the table on June 8. An alternate deal, which would see Yahoo! selling its search business to Redmond, was rejected by Yahoo! as not fitting into its corporate vision, even though Microsoft is still reportedly interested in such a deal.

Rumors of the collapse of all talks between the companies have sent Yahoo!'s stock down over 10 percent on a day when the stock market has seen a small and gradual decline. Microsoft confirms that it has no interest in buying Yahoo! in its entirety, but says it's still open to carving off a piece of the company.

"In the weeks since Microsoft withdrew its offer to acquire Yahoo!, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo! shareholders," the company said in a statement. "Our alternative transaction remains available for discussion." Both The Wall Street Journal and Reuters are reporting that the end of these talks has freed Yahoo! to finalize a pact with Google, which will have the latter company handle Yahoo!'s search advertising.