Yahoo’s (NSDQ: YHOO) statement: “Yahoo! Inc. (Nasdaq:YHOO - News), a leading global Internet company, today said the Yahoo! Board of Directors has carefully reviewed Microsoft’s (NSDQ: MSFT) unsolicited proposal with Yahoo!‘s management team and financial and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! and our stockholders.

After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.”

For the record: Goldman, Sachs & Co., Lehman Brothers and Moelis & Company are acting as financial advisors to YahooSkadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor; Munger Tolles & Olson LLP is acting as counsel to the outside directors of Yahoo.

Update: CEO Jerry Yang explained the board’s decision in an email to Yahoos this morning that also was filed with the SEC. We’ve posted the full text here.  It’s a combo justification for a higher price/rah-rah for the troops/explanation of why Yahoos won’t be seeing that stock premium anytime soon.