NEW YORK, July 7 /PRNewswire/ -- Carl Icahn today issued the following
open letter to Yahoo! shareholders.

    SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER
DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY CARL C. ICAHN AND HIS
AFFILIATES FROM THE STOCKHOLDERS OF YAHOO! INC. FOR USE AT ITS ANNUAL
MEETING, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN THE
PROXY SOLICITATION. WHEN COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM
OF PROXY WILL BE MAILED TO STOCKHOLDERS OF YAHOO! INC. AND WILL ALSO BE
AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE
AT http://WWW.SEC.GOV. INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY
SOLICITATION IS CONTAINED IN THE PRELIMINARY PROXY STATEMENT ON SCHEDULE
14A THAT WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26,
2008.




                                Carl C. Icahn
                               ICAHN CAPITAL LP
                         767 Fifth Avenue, 47th Floor
                              New York, NY 10153

                                                               July 7, 2008

    Dear Yahoo! Shareholders:
    During the past week I have spoken frequently with Steve Ballmer, CEO
of Microsoft. Several of our conversations have lasted as long as an hour.
Also, a few of our discussions have taken place while other top executives,
such as Kevin Johnson, participated. Our talks centered on the industry in
general but, more importantly, on how Yahoo! and Microsoft can do a
transaction together. Steve made it abundantly clear that, due to his
experiences with Yahoo! during the past several months, he cannot negotiate
any transaction with the current board. His logic is simple. If and when a
transaction was consummated, Microsoft would be guaranteeing a great deal
of capital at closing. However, a transaction could take at least nine
months and perhaps longer to obtain regulatory clearance in the U.S.,
Europe, and elsewhere. During that period, if the current board and
management team of Yahoo! mismanage the company (and their recent track
record is far from reassuring), Microsoft would be putting its money at
risk and a great deal could be lost.

    For example, in a transaction to purchase the whole company, a very
large amount of capital would be due at closing. Even in an "alternate"
transaction, where just the "Search" assets were purchased, large
guarantees would have to be made and, again, large sums could be lost if
the company was mismanaged. Microsoft perceives this risk may be quite high
with the current board and management in place. However, Steve made it
clear to me that if a new board were elected, he would be interested in
discussing a major transaction with Yahoo!, such as either a transaction to
purchase the "Search" function with large financial guarantees or, in the
alternative, purchasing the whole company. He stated that Microsoft would
be willing to enter into discussion immediately if the new board that has
been nominated were elected. While there can be no assurance of a future
transaction, as many of you know, I have negotiated successfully a large
number of transactions over the past years. If and when elected, I strongly
believe that in very short order the new board would, subject to its
fiduciary duties, be presenting to shareholders either a purchase offer for
the whole company or a very attractive offer to purchase "Search" with
large guarantees. I hope to continue to be speaking to Steve over the next
few weeks; however, since I do not as yet represent the Yahoo! board, both
Steve and I do not wish to get into details over price, or even which of
these transactions makes the most sense.

    Much has been said about how badly the Yahoo! board has "botched up"
negotiations with Microsoft over the past months. There is no need to keep
pointing out the mistakes I believe Yahoo! made by not immediately taking a
$33 offer made by Microsoft. But one thing is clear -- Jerry Yang and the
current board of Yahoo! will not be able to "botch up" a negotiation with
Microsoft again, simply because they will not have the opportunity.

    Our company is now moving toward a precipice. It is currently losing
market share in its "Search" function; our current Board has failed to
bring in a talented and experienced CEO to replace Jerry Yang and return
Jerry to his role as Chief Yahoo!, and currently it is witnessing a
meaningful exodus of talent. It is no secret that Google (which hired a
great operator as CEO) continues to dramatically outperform Yahoo!.
According to publicly available information, Google's income from
operations grew 59% per year over the last two years while Yahoo!'s shrank
21% per year. However, none of the above has caused the Yahoo! board to
hesitate in paying themselves $10,000 per week. IT IS TIME FOR A CHANGE.

    If elected, I have little doubt that the new board, subject to its
fiduciary duties, will do what the current board will not do, i.e.,

    -- Immediately start negotiation with Microsoft to sell the whole
company or, in the alternative, sell "Search" with large guarantees.




     -- Move expeditiously to replace Jerry Yang with a new CEO with operating
experience.


                                                        Sincerely yours,

                                                        CARL C. ICAHN

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