Yahoo sees growth up, argues for higher Microsoft bid

By Michele Gershberg

NEW YORK (Reuters) - Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) said on Tuesday it is on track to meet its 2008 earnings forecast and gave a rosy revenue view for the next two years as it makes a case for a higher takeover price from Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz).

The remarks allayed concerns about Yahoo's financial performance this quarter, since it would have less room to negotiate with Microsoft if those numbers fell short, analysts said. Yahoo, whose shares rose as much as 7 percent, will take its case to investors in meetings this week.

"They're putting this out to say we're not falling apart," said Martin Pyykkonen of Global Crown Capital. "They're putting very general, pie-in-the sky comments out there that, while not impossible ... look kind of aggressive."

Microsoft has not yet sweetened its $42 billion bid, and a recent Reuters poll showed many analysts expect the software maker to prevail in the Yahoo takeover without doing so.

But Yahoo, which reaffirmed its financial forecasts for the first quarter and full-year 2008, argued on Tuesday that its acceptance of an offer would immediately propel several key businesses for Microsoft.

"Yahoo provides meaningful strategic value and warrants a significant acquisition premium above its equity value," the company said in an investor presentation filed with the U.S. Securities and Exchange Commission.

Microsoft had no immediate comment.

ACCELERATED GROWTH IN 2009, 2010