Linux Journal Breaking News has just learned that Microsoft has backed down from its unsolicited takeover bid for über-search firm Yahoo.

Though details are currently limited, it appears from first reports that Microsoft decided to back down rather than launch a hostile bid after the two companies were unable to agree on a price. Microsoft's board had already agreed to up their offer — despite spending several months insisting they would do no such thing — but it apparently wasn't enough for Yahoo, who were insistent on at least $37 per share, which would have restored the deal close to premium originally offered. Yahoo's share price had risen almost $10 per share since the bid, while Microsoft's had continued to steadily decrease.

While pricing is the stated reason for the turnaround, one has to wonder whether Microsoft backed out because they decided they couldn't win, and didn't want to take the public relations heat that would have accompanied a face-plant. It was just last week that their rhetoric about winning at all costs changed to include the possibility of backing out. It won't be a return to halcyon days for Yahoo, however, as their shares will likely drop on Monday — an effect which some analysts have suggested could have been Microsoft's motive for withdrawing, as it would be incredibly difficult for Yahoo to fight back if Microsoft returns in the near future with a fresh bid.

Update: Yahoo founder Jerry Yang and Chairman Roy Bostock have now made their thoughts public, saying the company is "profitable, growing, and executing well on its strategic plan," and rallying the troops, with Yang noting he is "incredibly proud of the way our team has come together."

Various outlets are starting to peice together how the deal fell apart. Yahoo's two biggest institutional shareholders paint their own clear, if painfully biased, picture of what went wrong — according to their representative: "They're idiots."

We're thinking that if the two — both of whom are also large Microsoft shareholders — are so desperate to trade in their Yahoo shares for Microsoft, they should apply the first rule of investing: Buy low, sell high. Yahoo's at it's highest price in months, Microsoft is dropping like a stone; forget merger and just call your broker.