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Yahoo's Next Moves

For Yahoo, the future is anything but certain. In a company blog post, CEO Jerry Yang wrote that "The last 13 weeks have been a remarkable time here at Yahoo. We've been living under the microscope in a way we never have before." He went on to praise the Yahoo staff for continuing to press forward with the company's transformation strategy, and cast a hopeful eye toward the future.

"With Microsoft's withdrawal, we'll be better able to focus our energy on growing our industry leadership and maximizing value for stockholders," Yang said.

The problem that Yahoo (NASDAQ:YHOO) now faces is the same one it's had since Microsoft first announced its bid, only two dollars worse: How to find an alternative to selling outright that will bring equivalent value to the $33 per share price Microsoft had offered before talks broke down over the weekend.

Yahoo has already been the target of at least seven shareholder lawsuits charging that its board breached its fiduciary duty to investors in its response to the initial bid. Now that it has walked away from a higher bid, and its stock fell 15 percent to close at $24.37 today, more shareholders will likely bring a new wave of lawsuits, according to IDC analyst Karsten Weide.

"Yahoo's board just presided over destroying $6.5 billion of shareholder value, and they can't be happy," Weide told InternetNews.com.

Weide believes that Microsoft's withdrawal was merely a negotiating tactic, and that the deal will ultimately still go through.

"Microsoft called Yahoo's bluff," he said. "Now Microsoft is singing 'Time is on my side.'"

Yang told Reuters in an interview Monday that he had "mixed feelings" about the weekend outcome. Asked if Yahoo would still leave a door open for Microsoft to return, Yang said: "If they have anything new to say, we would be open. ... I am more than willing to listen."

While Yahoo's stock took a hit today, it did not tumble to the low-20's or high-teens as some had expected. To Weide, that resilience stems from the assumption among investors that the Microsoft acquisition is still in the cards. He predicts that pressure from Yahoo's institutional shareholders, which could take the form of an attempt to replace the board of directors at the shareholders' meeting next month, will ultimately force Yahoo back to the bargaining table -- in a significantly compromised position.

Other deal watchers are not so sure. JP Morgan's Imran Khan wrote in a research note that Yahoo's return to the table "is very unlikely in the short-term, as Yahoo management fought to maintain independence and proffered a three-year strategic plan. However, it could be a long-term possibility of Yahoo is unable to stage a turnaround."

All eyes on Yahoo

So if all eyes are not on Yahoo going forward, what will its next move be? In his blog post, Yang touted the company's recent announcements, including opening its search platform, the launch of Yahoo Buzz and its AMP ad management platform, but none of those will bring shareholders the overnight value that Microsoft's offer would have.