Yahoo publishes encouraging results

But will Microsoft raise its bid?

23 April 2008 11:56 GMT / By Katie Scott

Yahoo has published its quarterly results and they will do nothing to discourage Microsoft.

Despite the computing giant's statement that the results would not affect its bid, Yahoo's announcement that its profits tripled in the first 3 months of 2008 is sure to drive its determination to win Yahoo.

Whereas analysts are predicting that Yahoo will try and use the results as leverage for a higher offer from Microsoft.

Yahoo reported income of $542.2m (£271.5m) compared with $142.4m in the same period in 2007.

Revenues were $1818 million for the first quarter of 2008, which was a 9% increase compared to Q1 last year.

And Jerry Yang, Yahoo's co-founder and chief executive officer promised the growth will continue: "We believe we can significantly accelerate our revenue growth, return to our historically high margins, and double our operating cash flow by 2010".

Interestingly, the report records "incremental costs" of $14 million "incurred for outside advisors related to Microsoft’s unsolicited proposal, other strategic alternatives, and related litigation defense costs".

The results, however, may not win a higher bid from Microsoft, suggest analysts.

Jeffrey Lindsay, analyst at Sanford C Bernstein & Co, told the Beeb that the results were better than Wall Street expected but may merely prevent Microsoft from lowering its bid.

"It's less likely Microsoft would succeed with a lower bid. They wouldn't be able to reduce their price", he said.

In the meantime, Yahoo is not ruling out Microsoft's deal but Yang reiterated that there are other alternatives: "Our board and management team continue to be open to any and all alternatives, including a Microsoft deal".