From The Sip Trunking Experts

TMCNet:  Yahoo 1Q profit rises, but Microsoft bid likely to stand pat

[April 23, 2008]

Yahoo 1Q profit rises, but Microsoft bid likely to stand pat

(AP Online Via Acquire Media NewsEdge) SAN FRANCISCO_Yahoo Inc.'s first-quarter performance was a little like Goldilocks' favorite soup _ not too hot and not too cold, and that has set the table for a bitter battle over Microsoft Corp.'s bid to take over the Internet pioneer.

By delivering earnings and revenue Tuesday that surpassed analysts' estimates, Yahoo added credence to its board's contention that the Sunnyvale-based company is poised for a dramatic turnaround that justifies a higher sales price than Microsoft's initial bid of $44.6 billion, or $31 per share.

But neither the first-quarter results nor Yahoo's outlook for the rest of the year may be compelling enough to cause Microsoft to sweeten its offer.

"This isn't going to make Microsoft come and out offer $35," predicted Canaccord Adams analyst Colin Gillis.

That leaves the rivals at an impasse, just as they have been since Microsoft stunned Yahoo with its unsolicited takeover attempt nearly three months ago.

"This doesn't change the picture much at all," Susquehanna Financial Group analyst Marianne Wolk said.

Investors didn't find much to get excited about. Yahoo shares shed 15 cents in Tuesday's extended trading after dipping a penny to $28.54 in the regular session.

It now appears more likely the standoff between Yahoo and Microsoft will be resolved in a divisive battle that could drag on into the summer, opening the door for Internet search and advertising leader Google Inc. to grow even stronger while the other two companies are distracted by their duel.

"If you want to make money off this (stalemate), buy Google," said Global Crown Capital analyst Martin Pyykkonen.

Microsoft has threatened to oust Yahoo's board if the 10 directors don't accept the current offer Saturday. That risky course of action, known as a proxy contest, probably wouldn't be settled until Yahoo's shareholder meeting, which doesn't have to be held until July.

The cash-and-stock bid is now worth about $43 billion, or $29.88 per share.

Steve Ballmer, Microsoft's chief executive officer, reiterated the software maker has no plans to sweeten its offer. "We think we can accelerate our strategy by buying Yahoo and will pay what makes sense for our shareholders," Ballmer said in remarks made before Yahoo's first-quarter report came out.

Jerry Yang, Yahoo's co-founder, CEO and a board member, made it clear the company won't sell to Microsoft unless the bid is raised. "Our ability to execute on multiple fronts is clearly improving," he told analysts in a Tuesday conference call.

Yahoo said it earned $542.2 million, or 37 cents per share, during the first three months of the year, more than triple its profit of $142.4 million, or 10 cents per share, to begin 2007.

Most of the first-quarter improvement stemmed from a non-cash gain of $401 million recorded to recognize Yahoo's stake in the parent company of, a leading e-commerce site in China that went public last year.

If not for the Alibaba windfall, Yahoo would have earned 11 cents per share _ comparable to its profit at the same time last year, on an apples-to-apples basis.

On that basis, the earnings were 2 cents better than the average estimate among analysts surveyed by Thomson Financial.

Perhaps even more importantly, Yahoo provided the same full-year revenue outlook that it made in late January _ just two days before Microsoft made its unsolicited bid.

Yahoo's first-quarter revenue climbed 9 percent to $1.82 billion.

After subtracting commissions Yahoo paid its advertising partners, its revenue totaled $1.35 billion _ just $30 million ahead of analysts' average projection.

The first-quarter numbers provided a reminder of the ever-widening gap separating Yahoo from Google, whose profit during the same period climbed 30 percent to $1.3 billion on revenue that rose 42 percent to $5.2 billion.

Yahoo expects its revenue to increase more dramatically in 2009 and 2010 as the benefits from its expanded Internet advertising network start to kick in.

"We feel we are on the verge of fundamentally changing the game," Sue Decker, Yahoo's president, said in Tuesday's conference call.

An experimental advertising partnership with Google also could help boost Yahoo's profit. Yang and Decker to declined to discuss the Google tests, which began two weeks ago.

Analysts believe a long-term partnership between Yahoo and Google would be difficult to pull off because of the antitrust concerns that would raised, given that the two companies control more than 80 percent of the U.S. search market.

Yahoo also has been exploring a possible merger with the Internet operations of Time Warner Inc.'s AOL, which has been struggling in recent years.

"We will not enter into any transaction that doesn't recognize the full value of this company," Yang said.

Given the Microsoft bid, Pyykkonen said Yahoo's optimism should be taken with a grain of salt. "You almost have to discount anything positive management has to say because they are just trying to get the (sale) price up," he said.

But Microsoft's bid could rise above its original value even without management upping the ante if Microsoft's own quarterly earnings report _ due out Thursday _ pushes its shares above $32.60.

Microsoft's stock price finished Tuesday at $30.25, down 17 cents.

Many analysts believe Microsoft will raise its offer to between $32 and $35 per share, or about $46 billion to $50 billion, to prevent its prickly courtship of Yahoo from becoming even more acrimonious.

Copyright ? 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

[ Back To SIP Trunking Home's Homepage ]

Subscribe here for your FREE
SIP TRUNKING enewslettter.

Featured Partner

Featured Whitepapers

SIP Security for the Enterprise
Voice over IP (VoIP) is incorporated into a variety of computer networks, both public and private, and used for everyday transactions and communications among carriers, businesses, government agencies...

Voice-Optimized Network Delivers Premier Call Experience
Customers equate call quality with business quality. Real-time communication, interpersonal interaction, and the cordial tone of a call center representative can create a positive impression of your business that no email can match.

Featured Datasheets

Ingate SIParator E-SBCs
Adopting SIP is a simple process with the Ingate SIParator, the secure enterprise session border controller (E-SBC). The SIParator makes secure SIP communications - including VoIP,SIP trunking and more - possible while working seamlessly with your existing network firewall.

Ingate Firewalls
Everyone is talking about enterprise usage of VoIP, instant messaging and other types of realtime communications including presence and conferencing.

SIP Trunk Solutions for Service Providers
The award-winning Ingate Firewall and Ingate SIParator deliver a high quality, reliable SIP trunk connection between the customer's IP-PBX and the service provider network, and solve interoperability issues to simplify deployments and support for remote diagnosis of reported issues.

Featured Case Studies

Case Study - Haiti
With this solution our doctors were able to reach anywhere in the world quickly and easily, to get consults from colleagues, facilitate treatment, order supplies 'on the fly' and also help victims report back to families. The solution from Business Mobility Systems and Ingate worked immediately.

Case Study - Turkish Petroleum
"With one Ingate at the customer headquarters, all of their remote workers can enjoy the benefits of Turkish Petroleum's IP-PBX from anywhere in the world.

Case Study - GCM
"The Ingate solution overcomes the NAT traversal hurdle and makes it possible to connect customers to our VoIP service, without the need of costly leased lines or support intensive VPN tunnels.

Case Study - Kool Smiles
"Ingate's solutions provide the advanced level of security necessary for this medical environment and the tools to make the interface to the service provider hassle-free."

Case Study - NMSAS
"This solution really saved the day for us," said Paul Mercier, IT Administrator, NMSAS. "We needed to leverage SIP trunks to reduce costs, and they had to work with our existing Microsoft OCS investment."

Discover Leisure Connects Remote Users to its IP-PBX
Discover Leisure is one of the largest resellers of caravans and motor homes in the UK. With 15 branch of?

Featured eBOOKS

Internet+: The Way Toward Global Unified Communication
Connecting the telephony of the enterprise PBX or Unified Communications (UC) system using SIP trunks instead of conventional telephone lines has been very successful in recent years.

What is SIP Trunking? Edition 2
SIP trunking is becoming more of a focus for service providers. One key issue many service providers face when deploying SIP trunks is NAT, or Network Address Translation, traversal.

What is SIP Trunking? Edition 1
A vast resource for information about all things SIP - including SIP, security, VoIP, SIP trunking and Unified Communications.

Featured Videos

E-SBCs AS The Demarcation Point:
Ingate's Steve Johnson talks to Erik Linask about the role session border controller plays as the demarcation point at...

Demystifying DPI
How can deep packet inspection protect your SIP traffic as well as your entire network?

Featured Resources

What's New

Presenting the New Ingate/Intertex Website:
Internet+ is an extended Internet access allowing high quality SIP (Session Initiation Protocol) based real-time person-to-person communication, everywhere and for any application. It applies to both fixed and mobile networks ...

Featured Blogs

Featured Webinars

Secure SIP Trunking:
What You Need to Know

Successfully Deploying Enterprise SIP Trunking:
Tools and Techniques for Overcoming Common Roadblocks

Featured Podcasts

Getting the Most Out of Your SIP Trunks:
Ingate's Steve Johnson and TMC's Erik Linask discuss how best practices forgetting the most out of SIP Trunking services and common pitfalls to avoid.