Yahoo: We Like Google

In a letter to shareholders, Yahoo is swooning over its recent ad deal with Google, and paints them as a better partner than Microsoft.

In a letter to shareholders, Yahoo is extolling the results of its recent advertising partnership with Google, claiming the arrangement will result in anywhere from $250 to $450 million in cash flow during its first year. And while the letter doesn’t take the idea of a merger with Microsoft off the table entirely, it certainly paints Google as a more desirable partner than Microsoft—a stance that’s sure to further rankle shareholders already leading a revolt because Yahoo didn’t accept Microsoft’s unsolicited buyout offer earlier this year.

"Based on all the key factors–strengthening our competitiveness, protecting our strategic position, generating attractive financial returns—the Google agreement is far better than Microsoft’s search-only hybrid proposal," the wrote Yahoo chair Roy Bostock and CEO Jerry Yang in the letter. "This carefully structured agreement strikes the right strategic balance, enhancing our financial results while advancing our strategic objectives."

Yahoo is currently facing a takeover attempt from disgruntled investor Carl Icahn, who is seeking to oust Yahoo’s current directors, install his own, and eliminate so-called "poison pill" provisions in the company’s employee agreements while re-pursuing a takeover from Microsoft. Microsoft recently offered to take over Yahoo’s search operation along with a 16 percent stake in the remainder of the company, but Yahoo rejected the offer, saying it wouldn’t contribute meaningfully to the company’s cash flow.

The battle over the fate of Yahoo’s management is scheduled to come to a head August 1 at the company’s shareholder meeting.