Yahoo's stock took a beating after Microsoft withdrew its €30.6 billion (US$47.5 billion) takeover bid, an Associated Press report said.
But the punishment wasn't as severe as many analysts anticipated because investors suspect the rivals eventually will renew their mating dance, the report added.
Although Microsoft has publicly indicated it will focus on measures besides buying Yahoo in its effort to make its internet division profitable, several analysts predicted the software maker will revive its offer in the summer or fall if Yahoo can't snap out of a two-year trough that exposed it to an unwanted takeover in the first place, the report said.
'Should the frustration of (Yahoo) shareholders come to a boil, we believe (Microsoft) could re-enter the picture, essentially playing the role of the white knight,' analyst David Hilal of Friedman, Billings, Ramsey & Co, quoted by the report, said.
With similar opinions reverberating through the stock market, Yahoo shares shed 15%. That wiped out nearly half the gain they made after Microsoft made its bid Jan. 31. The drop left the Sunnyvale-based company's market value about €8.1 billion (US$12.5 billion) below Microsoft's last offer.
Meanwhile, Google, whose dominance in online search triggered Microsoft's bid, seems poised to benefit no matter how the talks go from here.