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Henry Blodget, writing on the Silicon Alley Insider blog, believes there is a 60 per cent chance that Microsoft will walk away from Yahoo Inc. Why?

His most compelling argument relates to the integration issues surrounding the takeover. Mr. Blodget believes that Steve Ballmer, Microsoft's chief executive, has been beset with criticisms from shareholders and employees about the deal.

"We think the complaints and concerns about the deal expressed to Steve Ballmer over the past two months have probably made him think twice about the wisdom of fighting to the death for Yahoo, even if he'll never admit that," Mr. Blodget said. "At the very least, they'll make it easier to walk way."

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As well, he believes that Microsoft's language and positioning have shifted recently in its public statements - from threats to resignation - and the shift is not likely a negotiating tactic. Meanwhile, Yahoo's Jerry Yang seems firm in his determination to stay independent of Microsoft, even if means that Yahoo's share price will fall well below Microsoft's $31 (U.S.) takeover offer.

"Jerry has demonstrated that he's not easily spooked, and he has to have been prepared for the possibility that Microsoft would walk," Mr. Blodget said. "In fact, we think Jerry would see this as a victory (which it would be) even if many Yahoo shareholders do not."

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