It’s sink or swim time for Yahoo! How will the internet company’s earnings, released Tuesday, affect Microsoft's hostile takeover attempt?
After two years of crumbling profits, Yahoo can't afford another letdown Tuesday when the internet icon reports its first-quarter earnings, explains CNBC Silicon Bureau Chief Jim Goldman
Although they only cover a three-month period, the results could determine the Sunnyvale-based company's fate as it grapples with an unsolicited takeover offer from Microsoft .
If Yahoo bounces back to exceed analysts' modest expectations, it could be a springboard to a higher bid from Microsoft or provide more credence to management's argument that the company will be better off remaining independent.
But a disappointing quarter would intensify pressure on Yahoo to accept Microsoft's cash-and stock offer, which was worth about $43 billion, or $29.99 per share, as of Monday's trading.
As if the situation weren’t already tense, Microsoft has set a Saturday deadline for Yahoo to accept its $31 bid or face consequences.
What's the trade here?
I think Yahoo! is desperate and will have to do anything they can to make this quarter look as good as possible, says Karen Finerman.
The only way to play it is long MSFT, adds Guy Adami.