Yahoo!'s board of directors released an official response to the Microsoft open letter sent over the weekend.

The statement reiterates that Yahoo!'s Board thinks that the Microsoft offer is not in the best interest of shareholders.
Yahoo! says that the company value has not been declining and that they reaffirmed their Q1 and full year guidance.
Yahoo! considers Microsoft's threat to commence an unsolicited offer and proxy contest to displace the independent Board members to be counterproductive and inconsistent with Microsoft's stated objective of a friendly transaction. Yahoo! believes shareholders will stick with the board.

Yahoo! is still open though to a Microsoft transaction if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft.
Via this Yahoo! press-release.