Microsoft chief said on Wednesday that the firm was ready to abandon its $43.6 billion bid for Yahoo in case both companies fail to agree on a price.

Yahoo's better than expected first quarter results reported on Tuesday, haven't changed Microsoft's view of Yahoo's value, said Steve Ballmer, Microsoft Chief Executive.

Microsoft aims at out-competing its arch-rival Google Inc through the acquisition of Yahoo although it is still failing to raise its bid to get the deal closed.

Ballmer set a Saturday deadline for Yahoo's board to accept a deal with Microsoft or face a lower bid that Microsoft would take directly to Yahoo's shareholders.

However, Yahoo's board said Microsoft's cash and stock offer significantly undervalues the firm.

The decline of Microsoft shares has devalued its Yahoo offer to $30.36 a share from $31.00.

The statement boosted Microsoft's shares by 3.24 percent or 98 cents to $31.23 on the Nasdaq.

Yahoo currently trails Google in the second place while Microsoft is third in the online business.