• Bloomberg News, Thursday, July 17, 2008 11 AM

Yahoo, which continues to fight for its independent life against Microsoft and angry investor Carl Icahn, called the pair's recent move to break up the company "smoke and mirrors." In a memo to investors, the Web giant said it was open to a full takeover of the company for $33 per share and that it would also weigh a move for its search business "as long as it provides real value to our stockholders." Yahoo rejected Microsoft's latest offer late last week.

In the letter, Yahoo pointed to its recent search partnership with Google and said that it was looking for other ways to boost its share price, suggesting a possible sale of its investment in Alibaba and Yahoo Japan. Yahoo CEO Jerry Yang has two weeks to convince shareholders that he and the Yahoo board should retain their jobs ahead of a shareholder vote against Icahn and his proxy slate of directors.

"You cannot count on Microsoft to bail out Mr. Icahn's misguided agenda," Yang and Chairman Roy Bostock said in the letter, which revealed that under the recent Microsoft search proposal, Yahoo would have received at least $2.3 billion in shared revenue annually over five years, or around $300 million per year in cash. By comparison, Yahoo would receive a maximum of $450 million in cash annually under the search partnership with Google, the sector leader.

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