Did Yahoo finally do something right?

After six months of flip-flop deal talks that drew mostly anger and disappointment from Yahoo Inc (YHOO.O: Quote, Profile, Research) shareholders, the Internet company may finally have done something right.

Yahoo on Saturday rejected what it called a 24-hour “take it or leave it” joint proposal from Microsoft Corp (MSFT.O: Quote, Profile, Research) and activist shareholder Carl Icahn, which involved selling Yahoo’s search business to the software maker and handing over the rest of the company to Icahn’s slate of board nominees to run.

Most shareholders of Yahoo want Microsoft to buy the company outright, preferably for around $33 a share, and appear to show little interest in any partial transaction that involves only Yahoo’s search advertising business.

“Our position is we prefer that Microsoft reenter negotiations to buy the entire company,” said Robert Hagstrom, a portfolio manager at Legg Mason Capital Management, which is Yahoo’s second-largest shareholder.

“We have made no decision on Icahn because we have no information about how he would run the company if Microsoft does not buy Yahoo. Furthermore, the latest developments to sell Yahoo search to Microsoft is unappealing,” he told Reuters by e-mail.

Investors now only have Yahoo’s version of events. Microsoft and Icahn, which owns nearly 5 percent of Yahoo, have not publicly commented on their proposal so far.

According to Yahoo, the non-negotiable offer required the immediate removal of the current board and top management. It came ahead of a critical August 1 annual meeting, where Icahn is seeking to replace Yahoo’s board and oust chief executive Jerry Yang.

Yahoo Chairman Roy Bostock said the offer was not in the best interests of Yahoo’s stockholders because the terms were inferior to the company’s current business prospects, including its search advertising partnership with Google Inc. (GOOG.O: Quote, Profile, Research)

Even Eric Jackson, a minority Yahoo shareholder and vocal critic of Yang during the last six months of on-again, off-again Microsoft talks, said the board did the right thing.