In what reads like a plea for survival as much as a list of merits and strengths, Jerry Yang sent this letter to shareholders last night detailing why Microsoft's $44.6 billion bid (which has dropped a few billion since it was made two weeks ago) undervalues the company.

Among the superlatives:

• 500 million users (or almost half of all Internet users in the world). This is attractive for a company like Microsoft that doesn't exactly scream "haven for Internet users." Microsoft would gain millions of Yahoo Mail users and Yahoo Messenger users, assuming they don't run for Gmail or the Google Chat.
• Killer display advertising. Yang claims represent 90 percent of the advertising inventory on the Web, but doesn't cite the figures to back it up.

I'm not sure if 90 percent is right, though I know display ads are a major money maker for Yahoo. I also know this is an area that Microsoft covets as a way to stand above the largely text-based ad market leader Google.

Yahoo is also stronger than either Microsoft or Google in mobile ads, according to a recent note from Bear Stearns, which has Yahoo grabbing most of the mobile ad market over the next few years. Grabbing Maven Networks this week should also boost Yahoo's video ad opportunities.

Yang pairs these strengths with gaudy claims of potential: "The global online advertising market is projected to grow from $45 billion in 2007 to $75 billion in 2010. And we are moving quickly 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."

Sure, but will the shareholders give them a chance to prove it? Doesn't look like it.

• $2 billion cash balance. Eh. That should be a lot better, but I guess that's about what you'd expect from a company that has spent over $1 billion in acquisitions in the last six months (Right Media, BlueLithium, Zimbra, Maven).
• Strong data center computing infrastructure assets. Okay, but those data center assets won't do much for you unless you are excelling in search or embarking on some serious cloud computing missions. Also, Yahoo is losing search share and has no cogent cloud computing strategy that we know of.
• Substantial investments in Yahoo Japan and China's Alibaba. The Asia-Pac properties complement Yahoo's mobile search and ad opportunities overseas.

Then Yang slings many of the same pledges and plans we heard when he outlined his 100-year day turnaround strategy.

In fact, this letter pretty much read like a more detailed version of what Yang wrote to his employees on Monday when he and the management team 86ed Microsoft's deal.

Of course, Yang also reaffirms that Yahoo is seeking help by writing that the board of directors is evaluating all of Yahoo's strategic options and is pursuing initiatives that "maximize value for all our stockholders."

That last phrase is key, but are the investors still listening? Yahoo needs to get something done quickly because I believe (and I'm hardly the only one) that Microsoft is set to counter with a higher offer.

Ah, these exciting times.