Yahoo confirms rejection of microsoft bid

When made populace on Feb 1, Microsoft's offer represented a evaluation of 62 percentage more than Yahoo's share price that day of $31. But as far as Yahoo is concerned, it doesn't cut it.

"After careful evaluation, the Board believes Microsoft's proposal substantially undervalues Yahoo, including our global brand, large worldwide audience, significant recent investing in ad platforms and hereafter growth prospects, free cash flow and net income potential, as well as our substantial unconsolidated investing," the statement continued.

Yahoo will assess other "strategic options" to maximize stockholder value, the company said. Yahoo was not able to provide any further information or an interview to ClickZ News this morn, according to a Yahoo interpreter.

In a letter sent to Yahoo employees today, CEO Jerry Yang expounded on the initial company statement, touting Yahoo's brand, large worldwide audience, the amount of time users spend on the site, investing in engineering infrastructure, and its operating cash flow, expected to "grow in the two-base hit digits in 2009." He also mentioned the firm's strong marketplace presence in Japan and China.

"[The] global online ad market is projected to grow from $45 one million million in 2007 to $75 one million million in 2010, and our more focused strategies place us to gaining control an even larger share of this marketplace. [We] are moving to take vantage of this unique window of time in the growing of the online advertising marketplace to build marketplace share and to create value for stockholders," stated Yang's message, devoid of working capital letters.

In add-on, Yang noted the company's relationships with a growth group of newspaper site partners, which, in addition to its Blue Lithium ad network and deals with eBay, Comcast and others, positions Yahoo to become "a valuable, unique network of premium sites."

Yang also reiterated the firm's ongoing mission to become the Web starting point for the most users, a "must buy" for advertisers, and to adopt platforms and applications from third party developers.

Since Microsoft made its solicitation public, the Internet industry rumor mill has been working overtime, floating possibilities regarding other future Yahoo buyers, and more recently, a report Yahoo has revisited merger talks with AOL to stave off the threat of more hostile Microsoft threats.

Speculation Yahoo could outsource its search ad business to Google has also resurfaced.

In its continuing quest to become a dominant player in the online advertising industry, Microsoft believes the best way to catch up with Google is to join forces with Yahoo. The two competitors had tossed around the idea of forming an alliance in the past before the bid bombshell.

The ultimate goal from Microsoft's point of view is to morph the two firms' search indexes and ad platforms to reduce redundancies in support systems, improve efficiency, and ramp up publisher yield and ad inventory to a potentially massive scale for advertisers.

In his letter to Yahoo regarding the offer, Microsoft CEO Steve Ballmer wrote, "The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform." He added, "Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced."