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(Via Macworld.)

Microsoft’s three-month courtship of Yahoo has ended but it changed both companies forever and neither can expect to return to the way they were.

Microsoft and Yahoo will need to deliver on promises, address questions, reassess and adjust plans and deal with challenges that grew from and during the attempted acquisition.

“The key thing is that both companies are going to have to articulate very clearly what their strategies going forward will be,” said Forrester Research analyst Charlene Li in a phone interview.

Yahoo has the most to prove and deliver upon, while facing a more uncertain future.

“For Yahoo, this is a situation of ‘Be careful what you wish for,’” said industry analyst Greg Sterling of Sterling Market Intelligence in a phone interview. “Yahoo’s directors and management very strongly indicated that they wanted to remain independent and now they get that opportunity.”

First order of business for Yahoo will be to monitor its stock, which got a boost after the acquisition bid and now faces a possibly negative reaction from financial markets.

If the stock gets clobbered in the coming days and doesn’t rebound, Yahoo could find itself an acquisition target again from other suitors, and possibly under less favorable conditions and terms.

Full story here.

(Via AppleInsider.)

Microsoft CEO Steve Ballmer has confirmed the move Saturday evening in a letter that has been delivered to Yahoo chief Jerry Yang as well as published online.

The Microsoft executive has revealed that his company earlier this week raised its bid from $31 per share to $33, but claims that a combination of Yahoo’s demand for an even higher bid and deliberate attempts to sour the deal have made any takeover unrealistic. He also contradicts a recent rumor that a hostile takeover was close, instead saying that any attempt to circumvent the Yahoo board with a proxy battle would be destructive.

“It is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders,” Ballmer explains. “This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft.”