As we reported three days ago, Microsoft is considered likely to try taking its buyout offer directly to Yahoo's shareholders. The move might push shareholders to oust the company's board and run with the takeover offer, which board members have deemed too low and refused.
Apparently, Yahoo also thinks this move is a possibility, because it has issued a letter to shareholders urging them not to fold to a potential direct offer from Microsoft. In the letter, InfoWorld says Yahoo CEO Jerry Yang reiterates that Microsoft's offer is too low, adding that Yahoo is "is the most visited site in the United States, held the top position in online display advertising, and counted almost one out of two of the world's Internet users as its members." Yang doesn't cite numbers, but according to InfoWorld, his assertion regarding online display ads checks out.
The letter also shows signs of hope for Yahoo's future, with Yang saying his company plans to increase visits to its domains "by 15 percent per year over the next several years." Yang adds that Yahoo will improve its advertising services thanks to a new search marketing system dubbed Panama and two acquisitions carried out last year.
Of course, the letter may only turn out to be a way for Yahoo to squeeze a juicier offer out of Microsoft. According to another report by eWeek, market researchers believe Yahoo's board has a "duty" to shareholders to accept a buyout from Microsoft eventually. Other deals—such as potential partnerships with Google and News Corp.—would be of lesser value to shareholders, which might cause them to sue the company. One of the researchers predicts Yahoo will eventually sell to Microsoft at a "modestly higher price" than the initial $44.6 billion offer, which has since decreased in value to $42 billion.