"Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape," Yang wrote in the email, which was filed with the US Securities and Exchange Commission.
"What has become clear in the past few days is how much people care about this company. I have heard from many of you, and from other friends and colleagues from around Silicon Valley and across the globe, that we need to do what is best for Yahoo! and our shareholders."
Microsoft's unsolicited offer to pay the equivalent of $31 per share for Yahoo! highlights the 14-year-old California firm's potential to recapture past glory, Yang told employees.
Microsoft publicly announced what it billed as a "generous" offer for Yahoo! on February 1, and said its plan is to combine resources to take on Internet powerhouse Google.
Google has come out against the proposed takeover condemning it as an attack on the freedom of the Internet.
Yahoo! has received calls from "a number of interested parties" and has a wide range of strategic options, a source close to Yahoo! told AFP.
Those options include outsourcing online advertising to arch-rival Google, a proven master at pumping revenues from that well.
