Yahoo's shares are plunging back and are expected to return to values recorded before Microsoft announced its unsolicited bid. Yahoo shares dropped 21 percent in Frankfurt as trading resumed, and they are expected to drop a few more percent in North American trading.

Microsoft yesterday announced that it has officially withdrawn its proposal to acquire Yahoo. The portal company, in behind the scene negotiations, asked Microsoft to pay at least $37 per share, while Microsoft only wanted to pay as much as $33 per share. The initial offer was $31 per share, a 62 percent premium at that time of the offer over the market value of ~$19 per share.

Although Jerry Yang's strategy proved Yahoo has the muscle to withstand a hostile takeover, it remains to be seen whether shareholders will ask for his head on a platter after their stock value will drop significantly to around the pre-deal value.

"Clearly there's frustration," said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock, in an interview with AP. "I am not even sure if Yahoo cares about its shareholders because they didn't show much regard for shareholders' best interests in this process," Chervitz said.

Ballmer's letter to Yahoo's CEO Jerry Yang revealed yesterday that Yahoo made it clear that it will defend itself in the case of a hostile takeover, which would have made the acquisition costly and undesirable for Microsoft. The top defensive measure which deterred Microsoft would have been the previously rumored deal with Google.

Now analysts and shareholders are expecting to see whether Yahoo will go ahead to strike a deal with Google or another advertising company. Such a deal will relieve most of the pressure from shareholders, who are angry that they lost an opportunity to make a quick buck by selling off to Microsoft at a significant premium over market value.

Yahoo’s board clearly said that it would not consider any offer lower than 40 dollars per share, which it considered to be a fair price. During last moment negotiations, Yahoo lowered the bar to $37, still too much for Microsoft which only went up to a $33 a share offer.