Yahoo CEO Terry Semel told the Financial Times that his company declined Microsoft's attempt to buy a stake in Yahoo.

The discussions between Yahoo and Microsoft took place during Microsoft's use of Yahoo's search technology, reported the Financial Times. Microsoft switched to Google Inc. as its search technology partner from Yahoo.

In March, Microsoft also announced enhancements to its search service and the acquisition of Onfolio Inc., a company that collects information from the internet and organizes it on personal computers.

Semel told the paper that although Yahoo talked with Microsoft co-owning some of their search, the final decision was not to sell.

"I will not sell a piece of search-- it is like selling your right arm while keeping your left; it does not make any sense," Semel said at an event at Syracuse University.