Yahoo calls Microsoft's actions `stupefying'

Yahoo Inc. sent a letter to shareholders Thursday in which it called Microsoft Corp.'s actions in its dance to acquire all or part of the Internet company "stupefying."

The letter from Yahoo Chairman Roy Bostock and Chief Executive Jerry Yang also hammered investor Carl Icahn, Microsoft's partner in the latest acquisition offer, for his lack of knowledge about the Internet business. It said the latest offer from "the odd couple" serves "only their very narrow special interests."

The missive marked the latest bit of acrimony to surface in Yahoo's scramble to maintain control of its board.

Icahn, a billionaire, has nominated a slate of candidates to oppose Yahoo's current nine directors in an Aug. 1 shareholder vote at the Sunnyvale-based company's annual meeting.

In attempt to avoid the showdown, Icahn and Microsoft teamed up with a buyout offer that Yahoo rejected Saturday. The terms are complex, but the deal would have involved splitting the company, with Microsoft taking the search engine and Icahn overseeing Yahoo's remains.

As part of their proposal, Microsoft and Icahn also wanted Yahoo to pay a special dividend of $4.50 per share and sell the company's Asian holdings - two options that Yahoo said it's considering doing on its own in an attempt to boost its stock price.

Yahoo shares slipped 4 cents to close at $22.44 Thursday. Microsoft had orally offered in early May to buy Yahoo in its entirety for $33 per share only to withdraw the bid after Yahoo sought $37 per share.

The two rivals have been intermittently negotiating and bickering for the past two months, with Icahn chiming in as he tries to broker a deal between Yahoo and Microsoft.

Much of Thursday's letter expanded upon Yahoo's previous criticism of Microsoft and Icahn.

Yahoo says that it would accept $33 per share now, but that Microsoft no longer is willing to put that much money on the table. Instead, Yahoo contends Microsoft is hoping to buy the entire company or its search engine at a "bargain basement" price if Icahn seizes control of Yahoo's board.

"Microsoft's flip flops and inconsistencies over the past five months are so stupefying that one can only conclude that Microsoft was never fully committed to acquiring Yahoo," the letter said.

Yahoo also reiterated its belief that it would be mistake to entrust its Internet franchise to Icahn because he is a technology neophyte with no concrete business plan other than working out a deal with Microsoft.

"We believe you cannot count on Microsoft to bail out Mr. Icahn's misguided agenda, at least not on terms that are in the best interests of Yahoo stockholders," the letter said.

Icahn, who owns a 5 percent stake in Yahoo, has said the board is more interested in protecting its jobs than evaluating the merits of selling its online search operations to Microsoft.