Yahoo’s shares have tumbled following Microsoft’s decision to pull out of its attempted takeover of the company – prompting chief executive Jerry Yang to insist that he is not closing down avenues of negotiation.

In what appears to have become a multi-billion dollar bout of brinkmanship, Microsoft decided that it would withdraw its $46.5bn (£22.3bn) offer for Yahoo, after it failed to accept last week.

Totally willing to do a transaction

But after Yahoo’s 15 per cent share slump, Yang told the Financial Times that he had not written off the chance of coming to an arrangement with Microsoft.

"We did not say it was a take-it-or-leave-it number in the sense that we would never negotiate any more," Mr Yang told the FT.

"We were totally willing to do a transaction, and they walked away.

"We’re always open to all alternatives. We’ve put out a way of having them buy Yahoo, give them a path to do that. If that’s what they want to do, we would be open to a conversation."

Share of the market

Although an advertising deal with Google could help stabilise matters for Yahoo, Microsoft’s decision to pull out raised the company’s own share price, which had dropped significantly on the news that it had bid for one of its key rivals.

The desire to challenge Google on the internet lies behind Microsoft’s strategy, but it remains to be seen if it is merely trying shock tactics to obtain its price for Yahoo, or it has decided that buying its way to a competitive market share may not be the way forward.