Amidst lots of guess work from the blogosphere about how will Yahoo respond to Microsoft, a letter has been sent out to Microsoft from the Yahoo’s Board of Directors and CEO Jerry Yang.

As anticipated by the blogosphere, the letter mentions that:

• They will not let Microsoft acquire the company at this value
• Yahoo is important for Microsoft both strategically and from products point of view
• Yahoo is not opposed to the deal but the offer is not in the interest of the stockholders
• The three-year financial and strategic plans along with the Q1 and full year guidance shows that Yahoo is on growth track and the offer undervalues Yahoo’s financials
• Launch of AMP!, the new advertising management platform, and other new products show that Yahoo is in-line with its strategic plan and growth commitments to its stockholders.
• Decline in Microsoft’s own share prices has significantly reduced the value of the offer in today’s date
• Microsoft has not provided information on the regulatory issues related to this deal as requested by Yahoo
• The threat of proxy contest is counterproductive and inconsistent with Microsoft’s claims of a friendly transaction and the board has full trust that the stockholders will support them if the proxy contest happens.
• Make a better offer which is superior to the available alternatives

Some of the points mentioned by Yahoo do make sense like the unfriendly approach to the deal and the importance of Yahoo for Microsoft to take a leadership position in search advertising and other web services.  At the end, if the board has belief in the shareholders and shareholders have faith in Yahoo’s performance, Microsoft will not not be able to acquire Yahoo at this price.  I think Microsoft will approach Yahoo with a better deal as they need Yahoo.

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