Yahoo shares fell 7.5 percent, as some investors were disappointed by the limited scope of the deal. Shares of Microsoft edged higher, while Google shares fell 1 percent.

“Those that were looking forward to a take-out, the deal today was rather disappointing,” said Marc Pado, U.S. market strategist for Cantor Fitzgerald & Co. “The 10-year pact, it’s not a bad thing. It’s not as good as what investors expected.”

Under the deal announced on Wednesday, Microsoft’s Bing search engine will be the exclusive algorithmic search and paid search technology for Yahoo’s sites, while Yahoo will be responsible for selling premium search ads for both companies.

Yahoo estimated the deal will boost its annual operating income by about $500 million and yield capital expenditure savings of $200 million. Yahoo also expects the deal to boost annual operating cash flow by about $275 million.

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