Microsoft's Walkaway Wins Investors' Favor

The one aspect where Microsoft does lose ground is on the time-sensitivity of its online growth strategy, Krans says. "Google(GOOG Quote) will have another couple months, perhaps years to extend its lead."

For now, Microsoft will either have to pour more money into growing its online division organically to gain search-advertising market share against Google, or buy a less-attractive target, such as AOL, a division of Time Warner(TWX Quote).

Even vocal Yahoo! shareholders saw the sense of reason behind Ballmer's decision not to take the risks of going hostile. "It's not completely surprising to me," that Microsoft chose not start a proxy battle, says activist shareholder Eric Jackson, who had been urging Yahoo! to accept the deal. "There was a lot that made that risky for them. It had the possibility of this dragging on and being a distraction for both sides -- and being costly in terms of losing talent at Yahoo!, in terms of morale."

Although "disappointed and angry" with the decision-making of Yahoo!'s board, Jackson has hope that a deal will still be struck. "I would bet that this isn't the end for Microsoft, because these two are a good match for each other." Jackson doesn't believe Microsoft can achieve its online search-advertising targets without Yahoo!

In research notes Monday, sell-side analysts applauded Ballmer's restraint, which stands in stark contrast to other tech deals gone hostile.

With a deal out of the way, Goldman Sachs reinstated a buy rating on Microsoft at a target price of $38. The company had suspended its rating after the offer was announced more than three months ago. Analyst Sarah Friar wrote that she expects shares to get a boost from Microsoft's decision to walk away.