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Yahoo Builds Defense Against Possible Hostile Takeover byMicrosoft


Sunnyvale (CA) - Yahoo has published some numbers which the company claims provide some insight why it rejected Microsoft’s acquisition offer. The firm unveiled a presentation to investors with financial expectations until 2010, which the company believes provides enough evidence for the claim that Microsoft’s $44.6 billion offer undervalues the company.

The announcement comes after Microsoft said that its directors and executive officers will actively "solicit" Yahoo proxies and Yahoo’s move to delay a deadline on which directors were to be nominated. Yahoo now appears to be building its case that either it does not need to accept Microsoft’s current offer, stating that the company’s global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential would call for a "substantially" higher offer.

A presentation given to investors claims that Yahoo will be able to roughly double its operating cash flow over the next three years from $1.9 billion to $3.7 billion and generate $8.8 billion in revenue, excluding traffic acquisition costs, in 2010. Included in those numbers are $1.9 billion of revenues expected to be generated from display/video advertising as well as $1.4 billion from added search revenue.

"Yahoo! is positioned for accelerated financial growth - we have a powerful consumer brand, a huge global audience and a highly profitable operating model," said Jerry Yang, the company’s co-founder and chief executive officer, in a prepared statement. Roy Bostock, chairman of the board, noted that these details provide "context for [the] board’s unanimous rejection of Microsoft’s unsolicited proposal."

"Yahoo! represents a truly unique strategic platform within our industry. The board of directors and management will continue to work closely together to ensure that any strategic path we pursue capitalizes on that uniqueness and value in a way that maximizes the benefit to our stockholders," Bostock said.

According to media reports, Microsoft and Yahoo are still negotiating the deal. Apparently, the two companies met last week to discuss a possible acquisition.