- Mike Shields

NEW YORK Yahoo! CEO Jerry Yang is urging his company's shareholders to reject any overtures from Microsoft, just as reports emerge that the embattled portal is seeking an alliance with News Corp.'s Fox Interactive Media.

In a letter issued to stockholders on Feb. 13, Yang trumpeted what he sees as Yahoo!'s many strengths -- including its huge user base, powerful global brand and online advertising prowess -- which in his view amount to compelling reasons why the company should not accept Microsoft's unsolicited $44.6 billion bid to purchase the company outright. He again declared that the Microsoft offer "undervalued" Yahoo!.

"[Yahoo!'s] assets -- our brand and its audience, our relationships with marketers, our financial strength, our technology and our strategic investments -- are the core of our value and our leadership position in the industry," wrote Yang. "We have a huge market opportunity -- and are uniquely positioned to capitalize on it."

Yang did allude to some urgency for Yahoo!, as he pointed to the huge growth projections for online advertising through the remainder of the decade, and a "unique window of time" during which the company can capture that growth and increase its value. But he also touted Yahoo!'s improved position since he came back on board last June. "Today, Yahoo! is a faster-moving, better-organized, more nimble company than it was just a few months ago," he wrote. "We have accomplished a great deal in a very short time -- and we are focused on building this momentum."

While not getting specific, Yang implied that Yahoo! was looking at alternative "strategic options" to help Yahoo! stave off Microsoft's advances. Several reports have emerged, which claim that Yahoo! is exploring a relationship with News Corp.'s MySpace to help counter Microsoft's proposal. Neither company would comment, though reports said that News Corp. would not look to buy Yahoo! outright, but instead would explore merging MySpace and Yahoo! in some fashion while making a significant capital investment in the company.