Microsoft CEO Steve Ballmer issued a letter to Yahoo CEO Jerry Yang over the weekend stating that the company withdrawing its offer to Yahoo. Microsoft had raised its bid to well over the $33 per share, upping it by nearly $5 billion which was still not enough to sway Yahoo board members.

“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer in the letter.

Microsoft announced Monday that it is going to acquire Danger, software maker for the popular consumer-targeted Sidekick mobile device. Reportedly the purchase came after months of negotiations, with Danger receiving a number of different offers and Microsoft doubling their original offer to keep Danger out of others hands. That offer has been rumored to be as much as $500 million, but no official terms of the deal have been revealed.

While Microsoft has done well making software for smartphones the company mostly targets business users and fewer general consumers. The Sidekick from Danger is almost the opposite and is aimed at the younger consumer-based market in which Microsoft seems to be keen on getting into. Microsoft also recently made a $44.6 billion offer to Yahoo to help build a larger online, consumer-facing presence and could have Danger in mind to be part of that overall strategy, working against dominate competitive figures like Google and RIM.

Microsoft announced this morning that it has official made an acquisition offer to Yahoo for the sum of $44.6 billion. Steve Ballmer on behalf of the Microsoft board of directors sent out a letter to Yahoo yesterday with the offer at $31 per share for all of Yahoo’s outstanding common stock.

According to the letter Microsoft has been in talks with Yahoo for some time, citing a letter in February of 2007 from Yahoo stating that “now is not the right time…”. Microsoft points out that things have not improved for Yahoo since earlier last year and without naming any other companies they refer to an increasingly dominate player in the market (we’re just guessing Google) who is increasing its own dominance by more acquisitions. Microsoft feels that combining forces with Yahoo increases the fighting chances in the online advertising space for both of them.