(15 February 2008 4:00 pm)

MUMBAI: Yahoo has sent a letter to all its stockholders, explaining why the board of directors rejected Microsoft's $44.6 million proposal to acquire it.

In his letter, Yahoo CEO Jerry Yang emphasised that "Microsoft's proposal significantly undervalues Yahoo and is not in the best interests of Yahoo stockholders."

Yahoo CEO Jerry Yang cited the growing online advertising market and his company's position to take advantage of that growth as reasons for rejecting the acquisition bid.

The online ad market is expected to grow from $45 billion last year to $75 billion in 2010, Yang said. "We want to take advantage of what we see as a unique window of time in the growth -- and evolution -- of this market to build market share and to create value for stockholders."

The main points in Yang's letter are:

• Yahoo is is the most visited site in the United States. It held the top position in online display advertising, and counted almost one out of two of the world's Internet users as its members.

• Yahoo is the top mobile destination in the U.S.

• Yahoo wants to take advantage of what it sees as a unique window of time in the growth and evolution of advertising market to build market share and to create value for stockholders.

• Yahoo's goal is to grow the percentage of total online advertising demand.

• Yahoo, meanwhile, has initiated talks with Rupert Murdoch's News Corp. on the possibility of a deal.

The letter, however, made no mention of talks with News Corp.