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As stated in the release, if the YHOO board does not accept within 3 weeks, MSFT is going hostile and will try to take over the YHOO board. A corporation does not make such public statements if it does not intend to follow through. YHOO is in trouble.

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And they threaten to lower their offer, which probably didn't go unnoticed by Yahoo! shareholders:

"If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal."

yahoo's board is in trouble, but it doesn't seem as if the shareholders are. either the merger will go through at $31/share, which is pretty good (even for those who got in at $29/share)--or the shareholders will get to vote on it in a proxy fight. the only losers in the latter scenario are those who vote in opposition to the final result. but whichever result that is, a majority of the shareholders will have believed in that outcome (either higher value with existing management or higher value with microsoft's offer) such that that outcome might actually be plausible, and we can all go forward from there.

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