I am very glad Yahoo rejected Microsoft's bid. Personally, I think the bid is undervalued, and Yahoo has too much potential to monetized its massive traffic. Jerry Yang is taking Yahoo towards the right direction -- streamline operation and cutting unnecessary headcount. And I think next step is to focus on its core strength.
Microsoft is likely to bid higher, probably no more than $36-$38/share. I sure hope Yahoo's board doesn't give in to the temptation!