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Yahoo results won't sway Microsoft fight

The company beats Wall Street expectations for its first-quarter earnings. But anyone looking for a dramatic shift to Microsoft's bid will have to wait.

Yahoo business outlook
Yahoo is standing firm on its revenue forecast and raising the bar on its cash flow expectations. But will that matter to Microsoft?

It looks Microsoft CEO Steve Ballmer may be right: Yahoo's first-quarter earnings won't have much of an impact on the takeover fight between the two companies.

As CNET's Stephen Shankland just reported, Yahoo beat Wall Street earnings expectations for its first-quarter profit by 2 cents. First-quarter revenue rose to $1.82 billion, from $1.67 billion in the same quarter a year ago; excluding so-called traffic acquisition costs, revenue was $1.35 billion, up from $1.18 billion. Net income, excluding $401 million from the Alibaba initial public offering, was $141 million, down $1 million from a year ago. But that was enough to beat Wall Street expectations of 9 cents per share.

Yahoo also repeated its revenue forecast for the year-- $7.2 billion to $8 billion--and raised its cash flow guidance for the year.

Will that be enough to get Microsoft to up what it's offering? Early returns say probably not. Yahoo shares were about flat in after-hours trading as a conference call with investors was just starting.

Message from Microsoft
One proxy solicitor had this to say about Ballmer's comments from this morning, when he said that whatever happened with Yahoo's results, "it doesn't affect the value of Yahoo to Microsoft":

"Ballmer wants to send a message to Yahoo investors, the market, and Microsoft shareholders that they have no plans to bid against themselves and plan to stay the course," said Rachel Posner, senior managing director of proxy solicitation firm Georgeson Inc.

Microsoft is expected to be listening in on the conference call as well, sizing up Yahoo's fundamentals, where its financial figures landed in relation to Wall Street's estimates, and how sustainable its business appears to be.

But in addition to those topics, some of the key words that Microsoft would likely be listening for include any reference Yahoo might make regarding "strategic alternatives" or "strategic review."

Yahoo CEO Jerry Yang did mention in a statement that Yahoo was exploring "strategic alternatives," but added it would consider only those alternatives that would "maximize shareholder value." Yahoo had previously rejected Microsoft's unsolicited bid as undervaluing the company.

The one-hour conference call ended with little discussion of the Microsoft takeover offer.'s Stephen Shankland will take a look at that and other Yahoo issues in a post coming up in a bit.