Microsoft withdraws offer for Yahoo -source

SAN FRANCISCO, May 3 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) has withdrawn its offer for Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) and does not plan to go hostile, a person familiar with Microsoft's thinking said on Saturday.

Microsoft raised its offer by $5 billion to $33 a share, but Yahoo wanted $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. (Editing by Todd Eastham)