SAN FRANCISCO, US - MICROSOFT Corp has withdrawn its offer for Yahoo Inc and does not plan to go hostile, a person familiar with Microsoft's thinking said on Saturday.

Microsoft raised its offer by US$5 billion (S$7 billion) to US$33 a share, but Yahoo wanted US$37 a share, this person said.

Microsoft Chief Executive Steve Ballmer has sent a letter to Yahoo Chief Executive Jerry Yang withdrawing the offer, the person said. - REUTERS