Yahoo CEO Explains Microsoft Rejection

February 15, 2008 8:12 a.m. EST

Sunnyvale, CA (AHN) - The CEO of Internet company Yahoo recently sent a letter to stockholders, explaining its decision to turn down the $44.6 billion bid made by software giant and rival Microsoft.

Jerry Yang said after their refusal of the bid that the amount, now valued at $42.1 billion, offered to Yahoo undervalued their company. Last Wednesday, the letter explained the nature of the refusal, in further detail.

The letter confirmed to stockholders that the Board "is continuously evaluating all of Yahoo!'s strategy options in the context of the rapidly evolving industry environment, and we remain committed to pursuing initiatives that maximize value for all our stockholders."

Yang then mentioned the company's strengths, including being the top destination for web searches - a fact that was backed by the December ratings that showed the Yahoo visitor count reaching almost 137 million, leading Google which has 133 million. Microsoft came in third with 120 million, according to InformationWeek.

Despite claims, however, Yahoo rated fourth in the online advertising performance, leading to its shares falling 0.6 percent to 11.4 percent, from the same period last year. The ratings showed rival Google to be the frontrunner in the ad market.

Yang said that the company was capable of investing in a strategy to improve performance, allowing it to take advantage of a market that was reportedly expected to expand in value, reaching $75 billion by 2010.

He also added that the company has made investments in the infrastructure, "enabling us to dramatically increase the speed of our search engine updates even while handling vast and growing quantities of data," as quoted by Search Engine Watch.

Yang insisted that the company had a strategy, and that it was on its way. The letter implied that considering the current and future capabilities of the company, a $42.1 billion sellout simply was not to be considered.