Following the latest skirmish, Yahoo (NSDQ: YHOO) CEO Jerry Yang has sent out his latest talking points to Yahoo management. The gist: Yahoo faces rough waters from now until the August 1 showdown, but the company can’t be distracted. It’s time to keep your head down and focus on business, while the board worries about Icahn and Microsoft (NSDQ: MSFT). In a longer letter sent to all Yahoos, not just management, Yang predicts more contentious attacks in the coming days. Other than that, the message is basically the same: head down, keep rowing! Yang reiterates that the latest plan would involve the replacement of the entire board and top management, even though Icahn said this morning, that the plan could involve some compromise on that front.

SEE ALSO: Yahoo Spells Out Latest Rejection; Icahn Goes Back To Proxy Fight, Says Yahoo Misled Investors

Meanwhile, Microsoft has released a statement challenging Yahoo on the accuracy of its recent announcements. Key points:

—The offer sent on Friday was sent at the behest of Chairman Roy Bostock. Here’s the language: “Specifically, on Thursday afternoon, July 10, Mr. Bostock called Steve Ballmer’s office to arrange a call. On that subsequent call, Mr. Bostock told Mr. Ballmer that “with substantial guarantees on the table and an increase in the TAC (traffic acquisition cost) rate, there are the pillars of a search only deal to be done.” Mr. Bostock encouraged Mr. Ballmer to submit a new proposal to Yahoo! for a search-only deal reflecting these terms.” This is big, since it means Yahoo could be open to partial deal if the prices and guarantees were right.

—It also denies that it set some type of ultimatum. Microsoft claims it wasn’t looking for a yes or no answer, but a confirmation that the new offer was good enough to warrant negotiations on a term sheet.

Release