Jerry Yang stared down Steve Ballmer. But can he do the same with Carl Icahn?

Yahoo, the embattled Web giant, defiantly dismissed financier Icahn's last-minute move to elect a rival slate of directors and revive merger talks with Microsoft.

In a response issued late Thursday, Roy Bostock, Yahoo's chairman, pledged to fight Icahn's hostile bid and accused the financier of a "significant misunderstanding of the facts." Bostock said Yang and Yahoo's board are "the best and most qualified group to maximize value for all Yahoo stockholders."

Earlier Thursday, Icahn unveiled his slate of directors, including Frank Biondi Jr., the former C.E.O. of Viacom, and Web billionaire Mark Cuban, the owner of the Dallas Mavericks.

In a letter to Roy Bostock, Icahn accused Yahoo's management and board of acting "irrationally" and losing the faith of both Yahoo and Microsoft shareholders.

"It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis," Icahn wrote. "It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 percent premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer."

But Bostock rejected Icahn's argument, pointing out that Microsoft has formally withdrawn its bid for the company. Microsoft withdrew its $33-per-share bid after Yahoo refused to budge from its $37 demand. Microsoft's original offer of $31 per share represented a 62 percent premium above the Yahoo's closing price on January 31, 2008, the day before the offer was announced.

Throughout its ordeal, Yahoo has argued that Microsoft's bid undervalued the company.

"We do not believe it is in the best interests of Yahoo stockholders to allow you and your handpicked nominees to take control of Yahoo for the express purpose of trying to force a sale of Yahoo to a formerly interested buyer who has publicly stated that they have moved on," Bostock wrote.

Earlier Thursday, Icahn's hostile bid got a boost when John Paulson, whose $30 billion hedge fund owns 50 million Yahoo shares, said he would support Icahn.

"We were disappointed that Yahoo failed to reach an agreement with Microsoft," said Paulson in a statement. "We continue to believe that a combination between Yahoo and Microsoft would form a dynamic company and a stronger competitor to Google."

Yahoo shares closed at $27.75 Thursday, up 2.25 percent, on renewed hopes for a deal with Microsoft after Icahn's move.