Yahoo financial results might coax Microsoft to increase bid

Yahoo would be the cynosure of all eyes when it reveals its first-quarter financial results. All shareholders, employees, analysts and media would be keeping their fingers crossed as these results might give more leverage to Yahoo ahead of its Saturday deadline to accept Microsoft’s $43-billion takeover offer.

Ross Sandler, an RBC Capital Markets analyst said, "They're going to use this as an opportunity to prove that they are worth a little more than the lowball offer that Microsoft is making. They're just trying to save some face and extract some value out of it for shareholders."

The company has four days before Microsoft's deadline to agree to its offer or face a hostile takeover fight and risk a lower bid. Earlier Yahoo ha rejected the offer and had argued that it's worth more than the $31 a share in cash and stock that Microsoft offered.

Meanwhile Sunnyvale, California-based Yahoo., expects that sales, excluding revenue passed on to partner sites, may have gained 12 percent to $1.32 billion. Net income at Yahoo fell for a ninth straight quarter. Analysts predict a decrease of 16 percent to $119.3 million on average.

Ever since the Microsoft bid, Yahoo! executives have been contemplating various possible alternatives to avoid a takeover. So much so, that Yahoo issued an abrupt announcement that it was launching a two-week "trial advertising" partnership with Google. The internet behemoth is also said to be in talks with Time Warner Inc.'s AOL unit and Rupert Murdoch's News Corp.

Internally Yahoo has adopted measures intended to make the hostile takeover expensive. These measures include promising executives two years' severance if they left Yahoo! "with good reason" within two years following an acquisition.

Microsoft CEO Steve Ballmer might still be tempted to raise its bid but he has a triumph card: support of Rupert Murdoch to create a partnership combining Yahoo!, Microsoft's MSN and News Corp. social-networking site MySpace.