Microsoft's Walkaway Wins Investors' Favor

SAN FRANCISCO -- Microsoft(MSFT Quote) made the best choice by withdrawing its buyout bid for Yahoo!(YHOO Quote) on Saturday -- even though jilted Yahoo! shareholders still hold out hope.

Shares of Microsoft were up 53 cents, or 1.8%, to $29.77 on Monday; Yahoo! shares -- down as much as 20% earlier in the session -- were off 14% to $24.63, as investors registered their dismay at losing the buyout premium.

In a letter to Yahoo! CEO Jerry Yang that was made public over the weekend, Microsoft CEO Steve Ballmer revealed that he was willing to go as high as $33 a share -- $2 above his initial cash-and-stock offer -- but Yahoo!'s board had held out for $37.

For Microsoft, that's the right decision, according to Technology Business Research analyst Allan Krans, who estimated that each additional dollar added to the offer price cost Microsoft in the neighborhood of $1.5 billion. ...