Yahoo's shares took a hammering early Monday morning. But by the market's close, a badly beaten, but not mortally wounded, Yahoo ended the day down 15 percent at $24.37 a share.

Microsoft closed out the session at $29.08, down 0.55 percent.

Yahoo shares fought back some of their losses in late morning trading, reaching $24.70 a share, down 13.85 percent from Friday's close.

At the start of the session, the Internet search pioneer was down nearly 20 percent, and in premarket trading down 22 percent.

Microsoft's gains have been shrinking through the morning, leaving the software giant up 0.24 percent to $29.48 a share in late morning trading.

Since the opening bell, shares of Microsoft, which remain in positive territory, have been edging slowly south, while Yahoo, which plunged into the red following Redmond's withdrawal over the weekend of its unsolicited buyout bid, has been pushing upward. Whether this convergence is a sign investors believe the parties may lock horns again has yet to be seen.

"We believe that Microsoft's decision to walk away is driven by its desire to expose Yahoo management as apathetic to shareholder interests," Heath Terry, a Credit Suisse analyst, said in a report.

Needham analyst Mark May, meanwhile, anticipates Yahoo will make a move to appease its shareholders by announcing a "transformational partnership or transaction," such as a Google ad outsourcing deal.

"However, it remains unclear if this deal alone will enable Yahoo to hit the aggressive (2009 and 2010 financial) projections it recently set forth, and we believe some large Yahoo shareholders are unhappy with the prospect of outsourcing a meaningful portion of the company's strategic business," May stated in his report.

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