INSTANT VIEW: Yahoo profit beats estimates

SAN FRANCISCO (Reuters) - Yahoo Inc (YHOO.O) posted a better-than-expected quarterly profit on Tuesday as it sought to convince investors that Microsoft Corp (MSFT.O) needs to pay more to buy the company.

COMMENTARY:

JEFFREY LINDSAY, ANALYST, SANFORD C. BERNSTEIN & CO

"This is better than the Street was expecting. This might pose some issues for Microsoft. It's less likely Microsoft would succeed with a lower bid. They wouldn't be able to reduce their price."

MARK MOWREY, SENIOR ANALYST, AL FRANK ASSET MANAGEMENT, LAGUNA BEACH, CALIFORNIA:

"We're not really impressed with this quarter. The company has been very innovative in the Web space but they haven't been able to turn that innovation into the kind of top-line growth you would expect to see compared to what Google is doing. We certainly do not think a Yahoo-Microsoft combination would solve the problem."

JIM FRIEDLAND, ANALYST, COWEN & CO

"Microsoft is breathing a sigh of relief. Even though these are solid results, given long and short term challenges, there's been no overall shift in Yahoo's business. Microsoft's offer is still the best offer on the table ... Could it modestly raise what it's willing to pay to just get the deal done? Yes. There's nothing in the results that would make Microsoft reassess its bid and raise it significantly. The trends are still the trends."

MIKE BINGER, FUND MANAGER AT THRIVENT FINANCIAL IN MINNEAPOLIS, OWNS MICROSOFT AND YAHOO SHARES

"First-quarter earnings look good, kind of in-line, maybe a little better on margins."

"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."

RYAN DETRICK, SENIOR TECHNICAL STRATEGIST, SCHAEFFER'S INVESTMENT RESEARCH, CINCINNATI, OHIO

"From a fundamental point of view, the news looks pretty positive, but until the uncertainty of the company's potential buyout by Microsoft is lifted we really don't see the stock moving too significantly either up or down.

"On the flipside, if the earnings are really good that could increase what Microsoft is anticipating to pay for Yahoo."

SANDEEP AGGARWAL, ANALYST, COLLINS STEWART LLC

"It is a modest beat top line. On their Q2 and full-year guidance, their top-line guidance is not clear about what is included in the definition. Their previous full-year revenue guidance has $5.65 billion as the mid-point and the new range has $7.6 billion as the mid-point. I would qualify that comparison because we may not be comparing apples to apples. It's not clear whether they are including net revenue or gross revenue. If they are using net revenue their guidance has gone up a lot.

"On Microsoft, positive earnings can only benefit Yahoo. This certainly strengthens Yahoo's arguments that it's worth more and there are signs of improving business and better margins."

DEREK BROWN, ANALYST, CANTOR FITZGERALD

"Seems like an incremental positive that they topped (Wall Street) consensus. Not sure where they came in relative to their guidance, but that said, the bar had been set fairly low by the company."

"It doesn't seem to change in any way the current acquisition landscape. 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."

RYAN JACOB, FUND MANAGER OF THE JACOB INTERNET FUND, LOS ANGELES, WHICH OWNS ABOUT 150,000 YAHOO SHARES BUT NOT ANY MICROSOFT SHARES

"I really don't think that these results change the situation too much although it does increase the likelihood that Yahoo will be able to negotiate a more favorable price."

"The numbers were a bit better than expected."

"It's nice to know that Yahoo could put up decent results in what seasonally is a weak quarter."

"They had a pretty solid quarter and raised guidance. It wasn't an extraordinary quarter. But it was good enough that in terms of the deal not much has changed."

"If Yahoo had posted poor results it would have put them in a very difficult position to try and negotiate a higher price."

"To be fair, I always thought a higher price was more likely. The question became really how much pressure Microsoft could put on Yahoo to complete a deal."

"Most shareholders generally believe strategically the deal makes sense. They just feel a higher price would be appropriate given Yahoo's franchise value."

"We feel at an absolute minimum, Microsoft will pay the original price, which is $31 on an adjusted basis, and we do think that there's a reasonably decent chance that that price will be a bit higher than that. That's our premise and it (Yahoo) is still one of our top positions today."

ROSS SANDLER, ANALYST, RBC CAPITAL MARKETS

"I think everyone is going to be modestly optimistic about Yahoo coming in at the upper end of the range on revenue and EBITDA. They also raised the full-year EBITDA guidance range by $50 million ... Their owned-and-operated sites' revenue were only up 18 percent year-over-year. We were expecting in the low-20s. Microsoft will be focused on what's going on with owned-and-operated sites revenue."

"The fact they have beaten (in the first quarter) and have raised a bit (full-year guidance) means the value should go higher."

(Reporting by Anupreeta Das in San Francisco; and Kenneth Li, Calvin Mankowski and Ellis Mnyandu in New York; and Muralikumar Anantharaman in Boston)