Yahoo Makes Case for Independence

On Tuesday, Yahoo filed a three-year plan with the SEC in an effort to convince investors that the company can offer shareholders value without merging with Microsoft -- or, at the very least, that Microsoft should significantly raise its bid for the company.

"The presentation supports the unanimous determination by the Company's board of directors that Microsoft's January 31, 2008 unsolicited acquisition proposal substantially undervalues Yahoo," the company said of the plan in a statement. "Yahoo's global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as its substantial unconsolidated investments [are] factors in its decision."

The plan -- originally reviewed by Yahoo's board in December -- shows Yahoo hitting Wall Street estimates this year and significantly beating them in three years. It highlights what Yahoo views as its competitive edges: first in mail, mobile and personal homepages and second in search, homepage in general and monetizing search. Yahoo also ranks itself as the No. 1 "U.S. ad network by page views."

Some of the changes for Yahoo outlined in the plan, available here in PDF format, include making the company's search more "open, social and relevant" and delivering a "must-buy" strategy for advertisers, including a "next-generation" ad platform.

With the plan, Yahoo estimates a year-over-year gain in revenues of 18 to 25 percent, and doubling its cash flow by 2010.

"Yahoo is positioned for accelerated financial growth -- we have a powerful consumer brand, a huge global audience and a highly profitable operating model," commented Yahoo CEO Jerry Yang in the announcement.

"We are pleased to share with the market more details about our business and our expectations for Yahoo's financial performance, which provided context for our board's unanimous rejection of Microsoft's unsolicited proposal," commented Yahoo's board chairman Roy Bostock. "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."

The plan was released just days after reports that Microsoft and Yahoo had been talking informally about the merger. Yahoo rejected Microsoft's unsolicited bid of $44.6 billion in February, and since then the companies have made various moves to either, in Microsoft's case, push the deal through, or, in Yahoo's case, fend off the acquisition -- at least at the offered price.

About the Author

Becky Nagel is the vice president of Web & Digital Strategy for 1105's Converge360 Group, where she oversees the front-end Web team and deals with all aspects of digital projects at the company, including launching and running the group's popular virtual summit and Coffee talk series . She an experienced tech journalist (20 years), and before her current position, was the editorial director of the group's sites. A few years ago she gave a talk at a leading technical publishers conference about how changes in Web browser technology would impact online advertising for publishers. Follow her on twitter @beckynagel.

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