Yahoo's (NASDAQ: YHOO) embattled management and board have one month left to prove to shareholders that they made the right call in rejecting Microsoft's (NASDAQ:MSFT) bid. With shares trading at about $20, they are going to have to do some fancy footwork to show why rejecting a $31to $33 per share offer was actually good for shareholders.

Yahoo is trying to convince investors that a proposed 'search' deal with Google (NASDAQ:GOOG) will provide the growth needed to restore Yahoo to previous glory. According to an AP report: " By relying on Google's superior technology to show some of the ads alongside its search results, Yahoo believes it can increase its annual revenue by about $800 million and generate another $250 million to $450 million in annual cash flow."

Keep in mind that since the Microsoft deal fell apart, Yahoo has lost more than $16 billion in market cap. It is going to have to generate a lot more in revenues to show that they made the right choice.

My other problem is that I have many friends who over the last week have told me they can't access their Yahoo mail or open up their saved stock portfolio's on Yahoo Finance. I, personally, have been locked out for two days.

What best symbolizes what went wrong at Yahoo Inc (NASDAQ: YHOO)? How it handled the rise of financial blogging.

When looking up stock quotes on Yahoo Finance, there is a financial blog section -- but it only publishes blogs from Seeking Alpha and no one else. Why? Because Terry Semel, Yahoo's ousted CEO, applied the old-boys media network model to Internet programming -- partner with large and well-established media companies and split up the profits. Did this work? No.

"In Web 1.0, the publisher told you what to read, in web 2.0, the consumer is the boss," said Andy Monfried, president and founder of LOTAME, in a recent interview on Wallstrip.com. Monfried was a top executive at Advertising.com which he helped build into the leading third party advertising network which is now part of AOL.

"Click through rates and brand methods do not apply any more. The cost to buy the media from social media networks is so much less than portals and other resources that have content. Going forward, advertising is all about user-generated content," Monfried noted.

LOTAME stands for Local Target Media and wants to be the connector between local social content and advertisers such as a Myspace or Facebook with the local pizza guy or the national advertiser. Yahoo has preached for years of its desire to be the leader in bringing the Internet advertising model to the local guy, but it never succeeded. It is the user-generated content that is the missing link for success in this area and Semel never got it.

Yahoo is in big trouble. Google Inc (NASDAQ: GOOG) figured out what was going to work and has won Web 2.0. For Yahoo to succeed it will have to find something it can do differently than Google, possibly aligning with Myspace.com, which was speculated yesterday on CNBC.

From an investment perspective, Yahoo's real estate position on the web is too big to pass up on. The Fly has blogged endlessly for the past year of Yahoo being a value stock and investors should jump into it and put it away. Our stance remains the same. A successfully run Yahoo has the potential to generate some big returns for shareholders.

After AOL's AIM and eBay's Skype, Yahoo Messenger is the third-most-popular instant communication service and after Microsoft's announcement today of its new instant messenger, it seems Yahoo wants to at least keep its place.

The new versions of Yahoo Messenger that include the new plug-ins are being released in 20 different languages.  The new plug-ins will allow users to share different Yahoo services such as calendar and maps for event planning for example.  Third party plug-ins such as the Amazon plug-in would let users see each other's Amazon wish-list and the eBay plug-in can assist in tracking live auctions and listings.

Without a doubt, these third-party plug-ins give Yahoo a definite competitive advantage.

Still in good news territory, Yahoo kept its position at the top of the personal finance space with 34.9% of the market share according to Hitwise, an online competitive intelligence service.  Microsoft's MSN Money was second with 13.67% share and Time Warner's CNN Money, 4.5%. MarketWatch was a distant fourth and Google Finance accounted for only 0.28%.

Microsoft, in addition to the MSN brand, integrated the content of CNBC into MSN Money while Time Warner benefits from the CNN brand, as well as its magazines. Google Finance was only released in March, but it seems it doesn't come close to Yahoo Finance and the features it offers.  Yahoo Finance aggregates content and up-to-the-minute  information from third-party providers. At least in Yahoo Finance, it seems Google isn't a serious threat.