Yahoo!'s (NASDAQ: YHOO) stock has been up a bit in the last two days as the market fell apart. The theory behind it was simple. The partnership with Google (NASDAQ: GOOG) to sell search ads has fallen apart. Yahoo! lost some revenue potential, but it also lost its best case for staying independent.

With Yahoo! in trouble, Microsoft (NASDAQ: MSFT) could come back to the table with a new offer to buy the portal company. It would be much less than the $33 that was on the table earlier this year, but Yahoo! might get a 50% premium over where its stock is today -- $14.

No such luck. Microsoft has made it plain that it won't be back. According to Reuters, "Software giant Microsoft Corp dismissed speculation it might still be interested in a takeover of Internet firm Yahoo Inc." In CEO Steve Ballmer's own words, "We made an offer, we made another offer ... We moved on."

With the tremendous downturn in internet advertising and concerns that even Google's search marketing business may be hurt by the recession, Microsoft may simply have determined that owning large internet properties is not a terribly good business. Its own MSN division loses money. Microsoft can continue to work on developing its own search engine technology and assume that Yahoo! does not have the capital to compete in that business over time.

Microsoft is telling Yahoo!, and anyone else who will listen, that it is prepared to take the long road to a decent position in the search industry. It may take time, but it is less expensive.

Douglas A. McIntyre is an editor at 24/7 Wall St.