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Belief is a powerful thing in this valley of hopes and dreams. Yahoo's board is set to reject Microsoft's offer to buy the company at $31 a share. Instead, Jerry Yang and Yahoo's other directors are seeking at least $40 a share, or nearly $60 billion — a price Microsoft may not be willing to pay. This is incredibly gutsy. It may wreck the hopes of a deal. And yet it may save the company.

No other bidders have publicly emerged. Microsoft could walk, leaving shareholders in the lurch — and Yahoo's board of directors exposed to legal repercussions.

The board's rationale? According to the Wall Street Journal, the $44.6 billion price "massively undervalues" Yahoo. (And the original price for the half-stock, half-cash deal has already dropped by $3 billion, along with the value of Microsoft's shares.) The directors also fear that regulators, who have already lengthened their antitrust supervision of Microsoft, will put a Microsoft-Yahoo deal through the paces.

There are two ways to look at this rejection. The cynical view: MIcrosoft has already established what Yahoo is; they're just negotiating over the price. Microsoft can easily afford the extra $12 billion; it's just a question of appeasing its own shareholders.

But there's a more optimistic view. Why is Yahoo's board willing to risk Microsoft walking away? Perhaps it's because, unlike most of the Valley, unlike Wall Street's investors, they have yet to write Yahoo off. Yahoo has value, they're saying. For Yahoo's dispirited employees, that's not just a matter of numbers. Someone out there believes that what they're doing has purpose. Do you Yahoo? In telling Microsoft "No," the board has answered yes.