The hard sell hasn't worked, so maybe a softer appeal to the heart could woo Yahoo into Microsoft's loving embrace? Seems Steve Ballmer spent the afternoon crafting a love letter to Jerry Yang and posted it to the Missing Connections section of Craigslist.

In a letter addressed to "Dear Steve," Yahoo CEO Jerry Yang and chairman Roy Bostock responded this morning to Microsoft CEO Steve Ballmer's weekend letter. The pair write that Yahoo is not opposed to a Microsoft "transaction," but that at $42.25 billion, Microsoft's merger bid remains too low. Bostock and Yang also reject Ballmer's clam that Yahoo management refuses to negotiate. They admonish: "Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit." Sounds like a call for the monkey dance to us. Yang and Bostock's whole letter is embedded below.

Photo sharing site and Yahoo subsidiary Flickr released a new friend finder feature yesterday that will search your email contact lists, much like many other social networking sites have done over the past few years. The difference is that rather than giving Flickr your email and password to access your account, you're taken to a page from your email provider, providing an extra layer of security and winning some kudos from the data portability crowd. However, Flickr users about to be deluged by friend requests from anyone they've ever traded emails with probably won't be so amused. In a completely unrelated development, original Ludicorp project Game Neverending is now back online, complete with a fake announcement from Yahoo CEO Jerry Yang.

Yahoo's board and top executives continue to hope Microsoft will raise its per share bid to $40, or at least the mid-$30 range. Not going to happen, a source close to Microsoft told the WSJ. Microsoft CEO Steve Ballmer and company consider Yahoo's talks between Time Warner and News Corp dead, and "there's no reason to bid against ourselves," this person told the paper. Meanwhile, frustrated Yahoo institutional investors told BoomTown they plan to support Microsoft in a proxy fight.

Yahoo's new site for women, Shine, began life with a link to The Phoenix's 100 Unsexiest Men of The Year. OK, fine, we clicked. But then we were astounded to find the list contained only 4 percent geek. Further, the unattractiveness of those who made the list, such Yahoo CEO Jerry Yang, was, frankly, insultingly underrated. Also, the whole list was out of order. Below, a poll where you can help us rerank both the geeks already on the list, and those who should have made it. Rachel Marsden, your assistance in this matter would be appreciated.

Ever since Yahoo CEO Jerry Yang put out a shareholder presentation promising a 72 percent revenue increase by 2010, hostilities have quieted between the Microsoft and Yahoo. That's because merger negotiations are heating up. BoomTown's Kara Swisher reports that Microsoft might raise its offer to somewhere between $34 and $36 per share to seal the deal. Microsoft CEO Steve Ballmer is also said to be considering offering more cash and less stock in a new bid, fattening Yahoo retention packages, and giving Yang and Yahoo president Sue Decker independence to run the company after it's owned by Microsoft. A display of such gratitude from Ballmer may seem uncharacteristic — until you remember that Yang and Decker's management is what landed Yahoo in this spot.

Disgraced stock analyst Henry Blodget has found a new reason to fawn over the Valley's billionaires: Jerry Yang, Steve Jobs, and Larry and Sergey pay themselves $1 salaries. Hank, haven't you heard that there's a crisis in Social Security? The $1 salary is the perfect combination of tax dodge and publicity stunt. Jerry, Steve, and the Google boys pay 6 cents of their buck towards Social Security, and a penny for Medicare. Those taxes aren't charged on investment income — the kind generated when a founder sells his shares. "It would be nice if we started to see the same gesture from chief executives in the rest of corporate America," writes Blodget. Sure, if you want to make sure the rest of us get nothing when we retire.

Who says there's no such thing as karma? A couple of years ago, Yahoo and its cofounder Jerry Yang did the Chinese government a big favor. Something about putting mouthy writers in jail. And now, the New York Times reports, a law that goes into effect this August will make the Chinese government Yang's best hope for fending off Microsoft CEO Steve Ballmer.

Charmingly indiscreet Yahoo engineer Rob Menke seems to think Jerry Yang is concerned about Valleywag's reporting on the Yahoo CEO's efforts to resist Microsoft's acquisition. Yesterday Menke twittered:

In a presentation filed with the SEC and embedded below, Yahoo declares that by 2010, revenues will reach $8.8 billion, up 72 percent from last year's $5.1 billion. "Display is a larger opportunity than search, and we are positioned to extend our leadership in display," Yahoo's argument goes. It's Yahoo CEO Jerry Yang's latest public plea for Yahoo shareholders to ignore Microsoft CEO Steve Ballmer's hostile bid for the company. Highlighting Yahoo Open Search, Yahoo Buzz, and the Yahoo Display Ad Platform, Yang and the gang argue "Yahoo warrants a significant premium above its equity value." Your copy of the presentation, below.

Jerry Yang and the rest of Valleywag readers have had a week to study the 10 best Ballmer-goes-nuts videos. In this, our latest Valleywag poll, tell us which clip jolted Jerry Yang back to the negotiating table and into Ballmer's bear-hug embrace. For me? I'm a Gene Wilder fan.

Remember how long it took for Microsoft and Yahoo to connect their instant-messenger systems? Microsoft's overtures to Yahoo executives seemed to be happening at the same pace. But at last, News.com reports, the companies are talking. Don't expect instant results. One of the reasons why Yahoo made itself vulnerable to Steve Ballmer's takeover bid? Because the stifling bureaucracy Terry Semel installed means everything takes forever to get done there. Jerry Yang's inability to commit to a course of action doesn't help. President Sue Decker is more decisive, but she's going through a divorce, which has to be a distraction, and her lousy people skills make it hard for her to execute on her plans. Steve, why don't you just go hostile? That seems faster. (Image by Geeks Are Hot)

Oracle founder and longtime Microsoft opponent Larry Ellison believes Microsoft-Yahoo is a good idea. "MSN is modestly successful," Ellison told the New York Times. "It would be a formidable portal combined with Yahoo." Ellison also suggested Yahoo CEO and cofounder Jerry Yang might not know what's best for the company. Company founders, said the guy who's completed two hostile takeovers in the last four years, "sometimes have a hard time separating their emotions from what's best for shareholders."

Yahoo Amr Awadallah loves his company like a Spartan loves ripply abs and bulbous pectoral muscles. So he and some friends slapped some subtitles over Zack Snyder's 300 to make a 10-minute short called Yahoo 300. We excerpt the best scene above. Yahoo CEO Jerry Yang is King Leonidas; Bill Gates is Xerxes. Sue Decker is Sarah Connor ... er, Queen Gorgo.

The wait staff at a swanky lunch spot for Valley executives does not heart Jerry Yang. The complaint: He tips 10 percent or less, no matter how big the bill. Since waiters share their tips with the rest of the staff, they each get — well, practically bupkes. For those of you not fluent in Yiddish, that means an amount so tiny it's insulting. Google executives, according to the same servers, are happy to open their wallets and tip big. But wait, what does this remind us of? Oh yeah, remember when Google outbid Yahoo for YouTube?

Microsoft CEO Steve Ballmer is reportedly considering changing the offer to buy Yahoo from half-cash and half-stock to all-cash, effectively raising the bid from $28.87 a share to the its original $31. That would up Yahoo's price tag from $41.5 billion back to $44.6 billion. Credit Yahoo CEO Jerry Yang for negotiating without really trying. Word has it his dalliances with Time Warner and News Corp. inspired the idea.

By extending a March 14 deadline for shareholders to nominate new board members, Yahoo CEO Jerry Yang thwarted Microsoft CEO Steve Ballmer's carefully orchestrated plan to make public what's so far been a behind-the-scenes proxy fight. Ballmer intended to announce a new slate of candidates for the board on March 13. Now Yahoo doesn't have to accept nominations until 10 days before it schedules its annual shareholder meeting. Yahoo could hold that meeting as late as July 12. Sources say Ballmer is pissed. "Ballmer is just one of many highly emotional people involved in this," a source told the New York Post. "Microsoft has been trying to avoid going completely hostile, but now it is going to get completely hostile." What's Ballmer going to do? Throw chairs at the meeting?

Yahoo CEO Jerry Yang and Time Warner CEO Jeff Bewkes want an AOL-Yahoo merger that would give Time Warner a large minority stake in the new company. The idea is that joining Yahoo and AOL — which itself plans to add a dozen new sites in the next six months — would create the dominant online advertising company. OK, maybe. If you're not counting search.

Since Microsoft announced its $44.6 billion bid for Yahoo on February 1, shareholders have filed six lawsuits against Yahoo CEO Jerry Yang and the rest of its board, according to the company's annual 10-K report. Two lawsuits from Michigan pension funds allege Yang and the board breached their duties to shareholders when they rejected Microsoft's bid. Two of four California plaintiffs, however, allege the board erred by supposedly favoring Microsoft's unsolicited proposal. Almost 27 million Yahoo shares traded hands today. Why didn't these complainers just sell their shares? That seems easier.

Secretary of State Condoleezza Rice goes to China next week. Yahoo CEO Jerry Yang is insisting she press for the release of Shi Tao, the Chinese dissident Yahoo helped to imprison. He wrote her a letter to say so. And Yahoo lawyer Michael Samway published it on Yahoo's corporate blog. Which isn't a distasteful public-relations gimmick at all! Especially when you consider that the terms of a settlement with Shi Tao's family requires Yang to lobby for his release. Here's the letter: