Yahoo! has replied promptly to an open letter sent to them by Microsoft's chief executive Steve Ballmer on Saturday.

Ballmer's letter set Yahoo! a three-week deadline to conclude an agreement or Microsoft would take its $44bn offer directly to shareholders.

In response, Yahoo's chief exec Jerry Yang said the board of directors has not changed its mind since it rejected the offer 11 February. He said that Yahoo!'s outlook had not changed its forecast for earnings since then and continued to believe the offer "substantially undervalues Yahoo!".

Yahoo! said Ballmer's letter "mischaracterizes the nature of our discussions with you".

Ballmer said Yahoo! had chosen "not to enter into substantive negotiations with us [Yahoo]".

On the contrary Yahoo's Yang said: "We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues... Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit."

Yahoo!'s letter also said that Microsoft had failed to respond to questions sent 28 March relating to possible anti-trust and other regulatory matters.

Yang's letter, signed off "Very truly yours", ends: "We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value."

The full letter is here. ®

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