The Yahoo board has responded to corporate raider Carl Icahn’s sharp criticism and call to action with this tiny note out today:

SUNNYVALE, Calif., Jun 06, 2008 (BUSINESS WIRE) –
Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today issued the following response to Carl Icahn in response to his letter dated June 6, 2008:

Leaving aside Mr. Icahn’s inaccurate interpretation of our retention plan, we again note that he has no credible plan to operate Yahoo!. We believe that Mr. Icahn’s suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo! and would clearly
not be in the best interests of our shareholders. Furthermore, his suggestion that we put out a price publicly to see if Microsoft will alter its stated position is ill-advised. As we have stated numerous times publicly and privately, we are open to any transaction including a sale to Microsoft if it is in the best interests of shareholders.

The last cryptic sentence is likely to infuriate Icahn (and many anxious shareholders) given that there is little indication the Yahoo board is willing to see any realistic Microsoft deal as in “the best interests of shareholders”.

Frankly, I would not want to be a board member at Yahoo now. Clearly it is in the interest of shareholders to be *open* to some price from Microsoft and also open to the possibility of a new board, and clearly the current board does not appear to feel either of these options are worthy of consideration. Although it is reasonable for a board to be optimistic about the potential of a company to surpass realistic expectations, this optimism should be weighed against a very realistic assessment of the best interest of shareholders.

I’m guessing the next move by Icahn will be to get Microsoft to commit to a price - probably in the neighborhood of $35 - with the understanding that MS rather than Yahoo will be in charge of retention and incentives and that the current board must go.

Disclosure: Long on YHOO