Earlier today, Yahoo released a letter talking itself up to investors, introing a new Web site called Yahoo Forward to do more bragging and — you guessed it — giving yet another smackdown to activist shareholder Dan Loeb of Third Point.

The move comes as the proxy fight over the Silicon Valley Internet giant moves ever closer to its annual meeting, which is set to take place sometime this summer.

In the letter, which had precisely zero new news, Yahoo recounted again that it tried hard to settle things with its disgruntled shareholder, but underscored its desire not to have Loeb on the board.

Why? Because the man who owns about six percent of Yahoo — which is about 99.99 percent more than any other current board member, which seems to make him pretty interested in Yahoo’s fate — is not qualified to be a director.

“The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board,” the Yahoo letter read. “In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. “

Buuuurn! (Not really.)

Loeb has his own Web site, Value Yahoo, which he launched last month to pillory Yahoo. He used it today to post an infographic titled “The Incredible Shrinking Yahoo.”

Buuuurn! (Not really.)

In fact, the real fire could start as early as next week and in the months ahead when other Yahoo investors start to pick sides in the fight.

That should really begin when independent proxy advisory firm Institutional Shareholder Service gives its recommendation on the issue to Yahoo investors.

A backing by ISS for another prominent proxy advisor Glass Lewis will help Loeb, although he still has an uphill battle to convince other shareholders to vote down Yahoo, which has a new CEO in Scott Thompson and a mostly new board.

That will be even more difficult, given how active Thompson has been in making a ton of productive-sounding moves, such as a recent restructuring which included 2,000 layoffs. While results will not be in for a while, a lot of we’re-hard-at-work strategery noise is probably a good tack for Yahoo.

The company will surely try to drop some more Yahoo bombs on Loeb to burnish its chances in the coming month — most likely first around a taxable sale of a large portion of its Asian assets related to new rounds of talks now taking place again, which might include a fat dividend to investors.

(Investors like fat dividends and the people who give them fat dividends, by the way!)

The company could also sell off some of its underperforming units, such as its advertising technology business and renegotiate its search partnership with Microsoft, all of which will give Yahoo more of a case that Loeb’s complaints are now unfounded.

But don’t count Loeb out, either. He’s a deft campaigner and also deserves some credit for forcing Yahoo to make several of its recent moves to oust weak members of its longtime dysfunctional board.

In that regard, at least, Loeb has been very relevant.

Here’s Yahoo’s letter today, in full (the odd bolding is all done by the company):

Yahoo! Shareholder Letter Outlines Forward Momentum and Urges Election of Its Board Nominees

SUNNYVALE, California, May 2, 2012 — Yahoo! Inc. (NASDAQ: YHOO), the premier digital media company, today released the following letter to all shareholders from its board of directors:

Dear Shareholder,

Since last August, Yahoo! has moved forward aggressively, implementing a plan to position itself for future success and to increase the value of Yahoo! for you, our shareholders.

* Just four months ago, we appointed CEO Scott Thompson, a highly accomplished and dynamic leader with the experience and expertise required to lead Yahoo! to renewed growth, innovation, and success. Scott is already moving the company forward fast — dramatically reorganizing the business around its core strengths with a mindset of focus, speed, discipline, and putting the customer first.

* The company has reconstituted the board of directors, with the optimal mix of expertise, experience, and fresh perspectives to accelerate the company’s transformation. We recruited five new, highly qualified independent directors through the Nominating and Corporate Governance Committee’s thorough search process. In addition, four of our directors volunteered not to stand for re-election at the 2012 shareholders’ meeting. As reconstituted, following the annual meeting a majority of Yahoo!’s directors will be new to the board this year, and all directors will have joined the board since 2010.

* Following a detailed and diligent review in an accelerated timeframe, the company produced a comprehensive strategic framework that will change what we do and, most importantly, how we do it to enable us to put our customers first in everything we do. We will deliver fun, engaging, and personalized experiences on all screens and forge strong relationships with our advertisers by producing measurable results, including consumer insights derived from our vast data, and delivering a higher rate of return on advertising spend. Specifically, we will focus all we do on the consumers who trust us to deliver personalized content and communications in our core businesses, and on the advertisers who want to connect with our consumers. Just as importantly, we are identifying what we will no longer do, in order to direct resources toward those businesses that generate the highest consumer engagement and the best return on our investment. As we excel in our core business, we will earn the right to pursue new growth opportunities.

* With this renewed operational focus, the company has defined a new organizational structure to support our core business and put resources closer to our customers. Effective May 1, Yahoo! will operate in three groups — consumer, regions and technology — all supported by our corporate teams. Each of these three groups will have clear accountability for getting results by delivering the best customer experiences. This more efficient structure will enable faster decision-making and more effective delivery of innovative products and services that measurably impact the bottom line.

* Beyond our core business, we are committed to continuing to be prudent stewards of our non-core assets and investments and to be thoughtful and diligent about monetizing their significant value at the right time and in the right manner. Should we do so, returning capital to shareholders will be a high priority.

In identifying qualified new members for the board, the Nominating and Corporate Governance Committee, led by its independent chairperson Patti Hart, conducted a thorough and impartial search process. Working with a leading executive recruitment firm and using the committee’s desired skill sets and experience for new board members, the committee identified over 100 potential candidates and sought input from a number of our major shareholders. Committee members engaged with over 20 individuals, including the four nominees proposed by Third Point. Committee members then conducted numerous in-depth interviews and carefully analyzed the qualifications of each candidate, including each of Third Point’s nominees. Committee members conducted additional interviews with those candidates that warranted further consideration, as determined by the committee in its meetings held throughout the process. Following completion of the full process, the committee and the board determined that the distinguished group of five candidates recently announced were the best choices, based on their individual accomplishments, experience directly relevant to Yahoo!’s business and its challenges, and records of value creation.

The new directors have strong records of significant accomplishment at the highest levels of media, advertising, marketing, Internet, technology, and finance, including corporate finance and restructuring, and insight into customers’ perspectives. The continuing directors are independent thinkers who bring impressive track records of success, and have been actively and constructively engaged as the company has developed its strategic framework to deliver renewed success and value to shareholders. We are challenging Yahoo!’s entire leadership team by asking tough questions, establishing rigorous goals, and developing a framework for strict accountability to move Yahoo! forward … fast.

Our focus now is on operating the company so that it delivers superior value to our shareholders. Supported by the many talented people who have contributed to charting our new course and inspired by the many shareholders, customers, and employees who have communicated passion for this great brand, we know that we will succeed.

Regrettably, our efforts to avoid a proxy contest with Third Point were unsuccessful. Following the recommendation of the Nominating and Corporate Governance Committee, we offered Third Point two board seats, including one of its nominees and a second mutually agreeable candidate, which would bring Third Point’s perspective into the boardroom. Unfortunately, Mr. Loeb declined to end his proxy solicitation on that basis, insisting that there could be no settlement unless he was personally appointed to the board. The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board. In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. Nevertheless, we want to emphasize that we remain committed to an open dialogue with all our shareholders and to working in a constructive manner with Third Point.

At the end of the day, we recognize that you, our shareholders, will make the decision as to the board you want to lead your company. We are confident that when you assess our new board’s qualifications against Third Point’s slate, you will come to the same conclusion that we did—that this is the right board with the right mix of skills and experience to lead the company forward to create value for shareholders. We also recognize that we have a great deal of work to do to support and challenge the management team to move the company forward fast. We intend to keep ourselves and the company focused and we do not intend to let ourselves be distracted from the work at hand.

Yahoo! is looking forward, focused on delivering superior value to all of our shareholders. We are building momentum with a great leadership team, unified in focusing the company on its core strengths, redeploying resources to the most productive areas of the business, and equipping the company to invest in growth and innovation. Your new board includes individuals who have proven operating expertise in media, advertising, marketing, Internet, technology, and finance, and have consistently proven to be thoughtful and responsible stewards of shareholder value, with a strong emphasis on disciplined capital allocation and a willingness to embrace structural change. They are already contributing to the rigorous action plan to realize Yahoo!’s potential and deliver increased value for shareholders.

With new leadership and the new board, we are building a stronger, nimbler, more profitable Yahoo! that is better equipped to innovate for our customers and will ultimately increase the value of Yahoo! for all shareholders.

You can read more about Yahoo!’s actions to move the company forward and create shareholder value at http://yahooforward.com.

Thank you for your support.

Yahoo! Board of Directors

How much does the Wall Street establishment dislike Google’s proposed share split plan announced Thursday alongside its first quarter earnings report? Apparently, a lot.

The plan essentially calls for Google stock to split two for one, and all shareholders will receive a share in a new class of stock that will have no voting power. The net effect will over time preserve the roughly two-thirds majority that CEO and co-founder Larry Page, co-founder Sergey Brin and Executive Chairman and former CEO Eric Schmidt have over Google’s proxy voting structure.

Shareholders expressed their opinion with their wallets, sending the price of Google shares down by more than four percent on a day when the broader NASDAQ exchange was down by only one percent. The drop reduced Google’s market capitalization by nearly $8.6 billion, which is not a trivial amount, even for a company with a market cap north of $200 billion.

At least one shareholder advisory firm, Philadelphia-based Egan-Jones, has come out strongly in opposition to the plan. “We strongly oppose governance structures, such as currently exists at Google and as proposed, in which the holders of one class of common stock have voting rights with fewer votes per share,” the firm said.

Also on the record in opposition? CalSTRS, the $145 billion California State Teachers’ Retirement System, which owns $400 million worth of Google shares, told Reuters that it’s not happy about the proposal and intends to let Google know about it.

You can expect more fireworks from the likes of Institutional Shareholder Services and Glass-Lewis after Google files its preliminary proxy statement, which will contain a lot more detail about the plan, with the U.S. Securities and Exchange Commission, which it said it will do sometime this week.

In the end, however, even shareholders as large as CalSTRS will have little they can do but vote against the proposal at Google’s next shareholder meeting. The proxy authority Page, Brin and Schmidt already have ensures that the measure will pass. Part of the deal of investing in Google when it first came public in 2004, was putting a lot of faith in management, as the company reminded shareholders this week.

That includes those moments when it puts money and time into seemingly weird things like self-driving cars and computerized eyewear. Those things may not make sense to outsiders, Page argued during a conference call with analysts, but there’s a method to the madness, and as a shareholder you’re kind of expected to roll with it.

Clearly, many with skin in the game aren’t so sure. Sean Egan, president of Egan-Jones, spoke up for that camp in an appearance on Bloomberg TV Friday. I’ve embedded the clip below.

For one thing, January’s restructuring of the board of directors has left a bad taste in the mouth of a pair of shareholder advisory firms, who have publicly called upon HP investors to vote against the re-election of as many as three sitting directors and against some say-on-pay proposals.

Sources familiar with the situation confirmed to me that after today’s event, HP’s investor relations team plans to mount what’s being described as a “road show” to counter the recommendations to vote against management made by Institutional Shareholders Services and Glass Lewis among retail investors. Exactly who is involved and whom they plan to visit couldn’t be determined. HP had no comment about it.

At least part of the road show’s mission will be to drive home the highlights of the strategy that Apotheker lays out in his keynote today. But there is some nagging concern that a sufficient number of shareholders, put off by repeated instances of board room drama over the last decade — Carly Fiorina’s ouster in 2002, the pre-texting scandal in 2006, and last year’s departure former CEO Mark Hurd — may vote against the three directors standing for another term: Lawrence Babbio, Sari Baldauf, and Ken Thompson.

That enough investors would vote against management to make a difference may seem unlikely at first until you consider the number of shareholder lawsuits stemming from the Hurd affair that are currently pending both in federal courts and in the Delaware Chancery Court. The fear of an embarrassing defeat for HP and its new board at the annual meeting on March 23 isn’t an unreasonable one.

Then there are the larger questions. As Bernstein analyst Toni Sacconaghi pointed out in a recent note to clients, HP’s stock has underperformed the S&P 500 since Hurd’s departure, and the lag has been driven mostly by uncertainty among investors about its strategy and about Apotheker himself. Its disappointing results in the first quarter didn’t help matters.

There are numerous questions around HP’s hardware strategy, particularly around the PC business. While it has promised to put the WebOS platform it acquired last year when it absorbed Palm into tablets and into every PC it ships, HP is still seen as far behind Apple on the tablet front. We all know why that is.

But the questions go deeper than that. Apotheker, a former CEO of the business software giant SAP, last week sent a strong signal in an interview with Bloomberg News that he plans to acquire some software companies.

What kind of acquisitions? He’s ruled out SAP, for one thing. And in a meeting with Bernstein’s Sacconaghi last month, he said any acquisitions would not be so large as to “keep investors awake at night,” meaning, Sacconaghi suggests, that they would probably not exceed $5 billion. Aside from buying software companies, he’s also signaled that the days of cuts–the hallmark of Mark Hurd’s tenure–are over. Cutting costs is out, investing is in.

But then there’s the larger issue about whether or not Apotheker can steer Hewlett-Packard, the storied Silicon Valley icon, on a course that restores its former glory. The question marks around him on this score are considerable because the task is just so huge. HP is a sprawling $126 billion juggernaut meaning change comes slowly, often in barely perceptible steps that leave impatient investors wondering what’s taking so long.

At the outset, the Apotheker’s strategy appears to be summed up pretty simply: Bring the market-leading position in hardware to bear and combine its offerings with a newly ascendant software business, which together will feed into an IT services business that aims to compete with IBM. It’s not going to be easy and the most important important thing that Apotheker has to do is inspire both analysts and shareholders alike that he’s the man to get the job done. As yet both are understandably skeptical mainly because Apotheker is an unknown quantity.

When Apotheker’s predecessor Mark Hurd took over at HP in 2005, there was very little doubt about what kind of CEO he would be: A relentless, unsentimental cost-cutter, and this much was clear before he was even officially on the job.

And while Apotheker has pointed tentatively in the direction he’d like to take HP, there are still more questions about him than there is certainty. His most important job will be to convince all concerned that he’s the man who can steer HP back on a course to greatness.

PREVIOUSLY:

• Another Advisory Firm Singles Out HP Director Babbio
• Shareholder Group Contends HP’s New Board Is Too Chummy
• “Peripatetic Polyglot” Léo Apotheker Wants to Save HP’s Soul by Buying Software Companies
• HP Earnings Today: Will Léo Apotheker Speak?
• Michael Dell Thinks HP Paid “Way Too Much” for 3Par
• Judge: HP Can Re-Investigate Hurd Departure
• Is This the HP Board That Will Allow Us to Stop Thinking About HP’s Board?
• Meg Whitman, Patricia Russo Among Five Joining HP Board
• HP Plans Another Probe Into Hurd Departure
• Léo Makes It Official: SAP’s Bill Wohl Joins Hewlett-Packard
• Want Enterprise Growth, HP? Think Services
• Mark Hurd Really Wants to Keep the Jodie Fisher Letter Private
• Mark Hurd Doesn’t Want You to Read the Letter That Cost Him His Job
• HP Networking Head: “People Are Tired of Paying for Cisco”
• HP Names Ex-SAP Chief Apotheker as CEO

While ISS advised shareholders to vote against the re-election of three directors Lawrence Babbio, Sari Baldauf, and Ken Thompson, a second report, this one from Glass Lewis, advised a vote against only one director: Babbio, the former vice chairman and president of Verizon, and currently an advisor to the private equity firm Warburg Pincus. (Pictured.)

It’s not the first time the firm has targeted Babbio. It made similar recommendations in 2007 and 2009. Its main concern is executive pay, and the way Lewis Glass sees it, Babbio as chairman of the board’s HR and compensation committee hasn’t worked hard enough to link performance to pay. According to the Glass Lewis analysis, HP paid its executives more than the median of 33 other similarly sized companies. “Overall the company paid more than its peers, but performed moderately worse than its peers.” On executive pay, Glass Lewis gave HP a D on an A-F scale.

The report also faults Babbio for the $35 million severance payout to former CEO Mark Hurd, now a president at Oracle. The costly agreement that has since triggered several shareholder lawsuits was executed on Babbio’s watch. “While it remains to be seen whether Mr. Hurd was truly terminated ‘without cause’ and therefor entitled to his severance payment, we believe members of the HR and compensation committee should be held responsible when severance payments trigger arguably unjustified payouts resulting in litigation,” the report says.

I’ve asked HP for a comment and will add one here when I hear from them. But from the way these advisory reports are reading, and depending on how influential these things usually are, it sounds like HP is facing the potential of a bit of a shareholder revolt. The annual meeting of shareholders is on March 23.

(I initially referred to the advisory firm as Lewis Glass and have now fixed that. Sorry about that.)

Now backing the measure: The Laborers’ International Union of North America and Institutional Shareholder Services, one of the most influential proxy advisory outfits around.

“ISS believes that shareholders would benefit by having a report on the company’s succession plans disclosed annually,” ISS said. “Such a report would enable shareholders to judge the board on its readiness and willingness to meet the demands of succession planning based on the circumstances at that time.”

That may be so, but according to Apple, which recommends shareholders vote against it, such a report would also give the company’s rivals unfair advantage by publicizing its objectives and plans and would undermine its efforts to recruit and retain champion executives. “The company takes succession planning seriously, and the board has adopted a comprehensive process to ensure continuity and maintain the superior quality of its management team,” Apple said in its 2011 proxy statement. “This process also allows flexibility to adjust to unanticipated changes in the market.”

What it doesn’t allow for is transparency, something investors might appreciate with Jobs now on his third medical leave from Apple.

Listening to all the birds-on-a-wire chatter about what will happen in the latest round of the never-ending Microsoft-Yahoo saga, it’s still hard to know what to think, given the ever-increasing noise around the proceedings, which will continue until Yahoo’s Aug. 1 shareholder meeting.

Yesterday, it got louder still as Yahoo Chairman Roy Bostock and CEO Jerry Yang sent out far and wide yet another stinkbomb letter, calling activist investor Carl Icahn a money-grubbing “corporate agitator.”

Well, yes–not that there’s anything wrong with that!

Unless you are shocked, shocked, that gambling is going on here, as Yahoo (YHOO) apparently is (not really, but it makes for a good story).

But not content to stop there, Yahoo spun a tale of what BoomTown can only describe as a sitcom paranoid fantasy about Microsoft (MSFT).

Essentially accusing Microsoft of trying to grab Yahoo on the cheap, Yahoo mocked its odd-couple “alliance” with Icahn.

“Microsoft’s flip-flops and inconsistencies over the past five months are so stupefying that one can only conclude that Microsoft was never fully committed to acquiring Yahoo,” they wrote.

Doubtless, today or tomorrow will bring a fresh retort from Icahn or Microsoft, full of the same not-so-sweet nothings (and by nothings, I mean nothing).

But enough of the past! It’s time to look to the future, sketching out some possibilities of what’s really going to happen.

There is no question that Icahn has no choice but to keep up the fight, although there’s also no question in my mind that he will remain in touch with Yahoo in some way, in order to hint that he is willing to accept a few board seats.

What Icahn truly needs, though, is to present a solid management team and a cogent plan, if he has any hope of convincing major investors to back him.

Because while many are decidedly unhappy with Yang and the current Yahoo board, taking such a major step as dumping them and leaving the company in Icahn’s hands–even for the short time he would be there–is decidedly more risky.

Can you say massive employee exodus, which will make the current spate of departures look minor? Can you say complete lack of leverage with Microsoft? Can you say cut off your nose to spite your face?

Meanwhile, Microsoft will refuse to engage in discussions with the current Yahoo board, and will keep up its current talks with Time Warner’s (TWX) AOL to keep the pressure on.

But if Microsoft does consummate that deal, it will have forever turned its back on Yahoo and its chance to grab hold of Yahoo’s search advertising and, perhaps, even its display business.

That would be a really dopey move, if the company truly means what it says about wanting to be competitive in online advertising.

While Microsoft probably should pay up and buy all of Yahoo to get what it wants, that boat has sailed.

It would be better if Microsoft tried to formulate a three-way deal in which AOL and Yahoo merge and Microsoft invests in the newco, becoming its search and search-ad provider.

In that way, regulatory issues over the obvious communications monopoly, were Microsoft and Yahoo to merge, would be moot, and the combined dominant content properties of Yahoo and AOL would command premium display-ad prices.

For Yahoo’s board, the situation is actually simpler. First, the board has been publicly insisting that it will sell Yahoo whole for $33, mostly because it cannot do otherwise.

Why? Well, it would be sued until the next millennium if it accepts any price lower than what was once offered by Microsoft. Only a new board could accept a lower price.

In order to prevent that from happening and keep shareholders from voting them out, Yang and the board must begin to concretely sketch out what they will do to fix Yahoo and bring its share price back up.

Yahoo has already indicated it could sell its Asian assets, which would bring in about $9 billion to dole out to shareholders. And there are certainly other moves it could make.

But probably what Yahoo has to do most of all is give shareholders a sense that its leadership going forward can handle the challenges ahead or is willing to change as needed to meet the challenges.

I sense that Yang is perfectly willing to entertain the idea of bulked-up and broadened management at Yahoo.

And while I do not think it likely, I suspect Yang would even step aside as CEO if that’s what it would take to keep Yahoo independent or allow it to make alliances to become stronger.

How this ultimately plays out will come clearer when proxy and investor services outfits–such as Proxy Governance, Institutional Shareholder Services and Glass Lewis & Co.–come out with their recommendations to Yahoo shareholders about a week before the Aug. 1 meeting.

By then, there will be a better sense of where the vote is going. And that, in the end, is all that truly matters.