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A number of Yahoo (Nasdaq:YHOO) shareholders (as expected) are so angry with how CEO Jerry Yang and the board of directors handled the offer from Microsoft (Nasdaq:MSFT), they're working stridently behind the scenes to get support to get rid of Jerry Yang and the board of directors in a proxy fight. Their purpose is to bring Microsoft back to the bargaining table.

Much of the action was taken by several huge Yahoo shareholders, who contact Microsoft and independent members of Yahoo's board in order to reconsider the offer.

Larry Haverty, portfolio manager with Gamco Investors Inc., which owns shares in both companies, said putting an opposing board in place would get "'overwhelming' support from shareholders."

"If Jerry's smart, he will reopen negotiations," Haverty said. "He is fighting a losing battle."

Some of the anger from shareholders was directed toward the decision to send Yang and David Filo, both Yahoo co-founders, who are perceived to be against selling the company. It made it look like there wasn't any intention of doing a deal; and that could have been true.

In what I consider a stupid move by Yahoo, they set the date for their annual meeting to July 3, which will make it extremely difficult for shareholders to nominate an alternate board. That speaks to the Yahoo leadership neglecting shareholder wishes and stubbornly holding to their personal desires. They should have thought of that before taking the company public.
 
It is becomingly increasingly clear that Yahoo has completely lost its direction and is floundering in a big way. The rejection of Microsoft as a suitor will probably hurt them, as it revealed even more how deep their problems are, and the weak leadership in place. The company simply has no vision and no idea where to go next.

The idea of merging with another equally troubled company like AOL (NYSE:TWX), or outsourcing a portion of its search business to Google (Nasdaq:GOOG) underscores that.