Search engine operator Yahoo isn't opposed to a transaction with Microsoft, but has rejected the software company's current offer of nearly $41 billion in cash and stock as not in the best interests of shareholders.

Jerry Yang, chief executive of Sunnyvale, Calif.-based Yahoo Inc., sent a letter Monday to Microsoft CEO Steve Ballmer indicating that Microsoft's proposal substantially undervalues Yahoo and asserting that Microsoft has mischaracterized the companies' ongoing negotiations.

Software California Yahoo Steve Ballmer