Internet Company Financial Projections

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					Yahoo!'s bullish forecast could give Microsoft cover to raise
bid
Wednesday March 19, 2008 - 11:57 AM EDT

Source: VC Ratings


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More analysts are weighing in on Yahoo! Inc.'s [YHOO] the financial projections revealed yesterday, but they
sound like a broken record.

Cowen & Co.'s James Friedland writes that the Internet company's 2009 and 2010 revenue and earnings
targets "offer a best case scenario that will be difficult to achieve."

In his research note Jefferies & Co. analyst Youssef Squali says Yahoo!'s growth forecast is
"aggressive,"--analyst speak for "ok, if they say so. He also notes that the numbers, while not impossible to
achieve, require a "leap of faith that's difficult to make in the current environment.

UBS analyst Ben Schachter raises the ante, calling Yahoo!'s revenue targets "very aggressive." He adds that if
Yahoo! had provided this type of detail previously, "It may have given us more confidence in management's
ability to execute against its own internal plans."

However realistic Yahoo!'s growth estimates are, the question remains what it means for Microsoft Corp.'s
[MSFT] $31 a share offer to buy Yahoo! (The deal is now valued at $29 a share, or $42 billion, due to a
decline in the price of Microsoft shares." Squali says Yahoo!'s projections, especially the company's
confirmation of its first-quarter 2008 guidance, "could afford Microsoft more wiggle room to sweeten its bid
to an all-cash deal or raise it slightly to reflect Yahoo!'s better prospects." Schachter says the move "serves as
a negotiating tactic intended to increase Microsoft's offer," and he maintains a $34 price target on Yahoo!'s
shares. Friedland also believes Microsoft will eventually prevail in its bid for Yahoo!.

Investors still seem to need more convincing that the two sides will eventually come to an
agreement, however. Yahoo! shares traded at $27.51 early in Wednesday's session. - David Shabelman

See March 18 story from Tech Confidential
See March 18 story from Tech Confidential
See March 19 post from All Things Digital




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