Solid Results Strengthen Yahoo Resolve

24 April 2008

SUNNYVALE, California: Analysts are hedging their bets on Microsoft upping its offer for Yahoo, following the web pioneer's first quarter jump in profits.

The company reported better-than-forecast income of $542.2 million (€339.7m; £271.8m) compared with $142.4m in the year earlier period. Sales were up 8.7% to $1.82 billion.

Yahoo is hoping the numbers will muddy the waters around Microsoft's current unsolicited bid of $43 billion.

Meantime, co-founder/ceo Jerry Wang said the online search firm remained open to forging a deal with the software titan, but was also receptive to "any and all" alternatives.

Comments Jeffrey Lindsay, analyst at Sanford C Bernstein: "This might pose some issues . . . It's less likely Microsoft would succeed with a lower bid. They wouldn't be able to reduce their price."

However, Jim Friedland, from Cowen & Co, counters: "Microsoft is breathing a sigh of relief. Even though these are solid results, given long and short term challenges, there's been no overall shift in Yahoo's business."

Microsoft ceo Steve Ballmer hinted it was unlikely the bid would improve: "We think we can accelerate our strategy by buying Yahoo and will pay what makes sense for our shareholders. 

"I wish Yahoo all the success with its results, but it doesn't affect the value of Yahoo to Microsoft."

Microsoft has warned if its bid is not accepted by Saturday, it will mount a hostile takeover at a lower price.

Data sourced from BBC Online; additional content by WARC staff