Some Yahoo shareholders are still praying Microsoft will once again ride to their rescue, this time with a bid in the mid-to-high $20s. This price would have sounded outrageous six months ago, when Microsoft was getting ready to raise its Yahoo bid to $33, but now, with Yahoo's stock back below $20, it sounds just fine.

Unfortunately, Microsoft's announcement this morning makes it slightly less likely. Microsoft just launched another stock buyback program, giving it the ability to buy $40 billion-worth of its own stock over the next five years.

We don't want to overstate the impact of this announcement on Yahoo: Microsoft isn't obligated to follow through on the buyback--it could never buy another dollar of its own stock--and it will generate far more than $40 billion of cash over the next five years. But the announcement shows that Microsoft is focused on using its cash in ways other than waiting for Yahoo's management to come to its senses.

(A buyback, by the way, would be a much better use of Microsoft's capital than buying Yahoo. Buying Yahoo would be a disaster for Microsoft. Unfortunately for Yahoo, it seems as though Microsoft may finally have figured that out.)

See Also: Yahoo Should Have Sold Search To Microsoft