Yahoo's Earnings Unlikely to Boost Microsoft Bid
Yahoo posted quarterly profit at the top end of Wall Street's lowered forecasts, but analysts questioned whether the results would force Microsoft to increase its takeover bid for the company.
The online search and advertising firm said it earned 11 cents a share on a topline of $1.35 billion in the first quarter, excluding one-time items, compared with a profit of 10 cents a share on sales of $1.324 billion last year.
A consensus forecast of analysts who follow Yahoo called for earnings of 9 cents a share on revenue of $1.183 billion in the most recent quarter.
For the current quarter, Yahoo now sees revenue reaching a range of $1.73 billion to $1.93 billion. Current estimates for the quarter stand at $1.37 billion.
The company's stock was slightly lower in extended trading Tuesday after finishing regular market hours near flat at $28.54.
In the quarter that ended March 31, the struggling Sunnyvale, Calif.-based Internet company began a fight to avoid an unsolicited takeover by Microsoftand started the process of cutting up to 7 percent of its workforce.
In February, Microsoft offered $31 per share for Yahoo in an unsolicited bid originally valued at $44.6 billion.
Analysts told Reuters that the results were unlikely to sway Microsoft to boost its bid.
"It doesn't seem to change in any way the current acquisition landscape," said Derek Brown, an analyst with Cantor Fitzgerald. "It's hard to see an indication that the trajectory of Yahoo's business has altered noticeably, and in that light there doesn't seem to be a compelling reason for Microsoft to alter their bid."
"First-quarter earnings look good, kind of in-line, maybe a little better on margins," said Mike Binger, a fund manager at Thrivent Financial who owns both Microsoft and Yahoo shares. "But there is some guidance out there that I don't have any explanation for, way ahead of estimates."
"The only thing they've said is long-term investments are beginning to pay off. It's surprising that they can raise their next-quarter guidance so much. I would say at this point Microsoft would stay their bid," Binger told Reuters.
CEO Yang: Open to 'Any and All Alternatives'
Yahoo remains open to doing a deal with Microsoft
"Our board and management team continue to be open to any and all alternatives, including a Microsoft deal," Yang told investors on a conference call to discuss the company's first-quarter results, released earlier in the day.
Yang said the company's recent efforts to remake its business strategy related to technology, audiences and advertising customers were "starting to pay off."
Yahoo's top executive said that while the company remains active in the Web search advertising market, its emphasis is on display advertising, which corporate marketers rely on for online brand ads.
"While we see opportunities in Web search, our largest opportunity is in display advertising," he said.
CFO: No Problem with Microsoft, Just Its Bid
Yahoo Chief Financial Officer Blake Jorgensen said Tuesday the company was not opposed to selling to Microsoft Corp, but is against a deal that undervalues the company.
In an interview with Reuters, Jorgensen said its first-quarter results were "right on track'' despite having to deal with the distraction of Microsoft's offer.
"We are not opposed to a deal with Microsoft. What we are opposed to is seeing it at a value that discounts the underlying value of the company,'' Jorgensen said moments after the company announced its first-quarter results.
Yahoo and Microsoft are in a stand-off over Microsoft's $43 billion bid to acquire the company. Yahoo has said Microsoft's unsolicited offer undervalues the company, while Microsoft has said its offer is full and fair.