The first tangible reaction to Microsoft's decision to drop its bid for Yahoo will come in the early hours today as the companies' stocks...

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The first tangible reaction to Microsoft’s decision to drop its bid for Yahoo will come in the early hours today as the companies’ stocks begin trading for the first time since the deal collapsed.

The prevailing wisdom is that Yahoo’s shares will fall precipitously from $28.67, where they closed Friday after a substantial gain on rumors that negotiations were back on and Microsoft was raising its price.

That turned out to be the case, but the $33 a share Microsoft offered wasn’t close enough to the $37 Yahoo’s board wanted.

Microsoft’s stock, on the other hand, could rise now that there is some certainty on its pursuit of Yahoo.

In a meeting with employees two weeks ago, Chief Financial Officer Chris Liddell explained why Microsoft shares had given back some of the earlier gains of the company’s current fiscal year.

“I think until the Yahoo situation clarifies itself one way or another, it’s going to be an overhang on our price,” he told employees.

Shares closed Friday at $29.24. They had been as high as $37.50 in the past year.

Charlie Di Bona, analyst with Sanford C. Bernstein, expects to see some bump in Microsoft’s shares now that the Yahoo deal has reached a resolution.

But the company’s prospects in online advertising still may weigh on its share price.

“Taking this uncertainty away doesn’t remove all the uncertainty,” he said.

— Benjamin J. Romano