Will Yahoo Earnings Report Boost Microsoft's Bid?

Yahoo reported quarterly earnings Tuesday that were higher than expected. The Internet company is trying to fend off a takeover from Microsoft, using its new revenue as proof that Microsoft's initial offer is too low. But Microsoft appears uninterested in increasing its bid.

RENEE MONTAGNE, host:

Now, onto other news, the continuing saga of Microsoft's effort to take over Yahoo. Yahoo reported better than expected financial results yesterday, which helps its executives make their case for a higher asking price. Apparently, Microsoft isn't impressed.

From Seattle, NPR News Wendy Kaufman reports.

WENDY KAUFMAN: Jerry Yang, Yahoo's co-founder and CEO, called his company's performance this quarter extraordinary, given the environment the company was operating in. Per share earnings were $.11, $.02 more than Wall Street expected. In a conference call with reporters and analysts, Yang reiterated Yahoo's position, that the company was open to a Microsoft takeover, but the price would have to higher than the $31 a share Microsoft initially offered.

Mr. JERRY YANG (CEO, Yahoo): Our board and management are committed to choosing a path to maximize stockholder value and will not enter into any transaction that does not recognize the full value of this company.

KAUFMAN: Two and a half weeks ago, Microsoft told Yahoo that if it didn't agree to a deal by this coming Saturday, Microsoft would launch a hostile takeover bid. Yesterday, Microsoft CEO Steve Ballmer said, in essence, Yahoo's results don't change anything.

Some Wall Street analysts agree, but Mark Mahaney, director of Internet research at Citigroup, says Tuesday's number from Yahoo could translate to a slightly better offer from Microsoft.

Mr. MARK MAHANEY (Director of Internet research, Citigroup): Given the fact that this was a modest beat and raise quarter by Yahoo, at the margin, you have to argue that this increased Yahoo's negotiating leverage.

KAUFMAN: Mahaney believes the deal could be completed relatively quickly if -and it's a big if - the price is right from Yahoo's perspective.

Wendy Kaufman, NPR News.

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