Yahoo Backs Up Its Argument Against Microsoft Bid

Explains Why It Feels Undervalued By Stressing Scale, Improved Ad Platforms

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NEW YORK ( -- Yahoo has already said it believes Microsoft's unsolicited takeover attempt undervalues Yahoo's business. Now, in an investor presentation released to the public, the Sunnyvale, Calif.-based company explains why.

In a detailed financial plan that the internet icon said it initially prepared and presented in December, before the Microsoft bid was officially launched, Yahoo projects it will double its operating cash flow over three years, reaching $3.7 billion by 2010. It also projects revenue after traffic acquisition costs to top $8.8 billion by that date, which it said beats Wall Street's current expectations by 25%.

Yahoo goes on to reiterate it will focus its consumer efforts on "starting points," including search, My Yahoo and e-mail.

And Yahoo also includes a description of why it considers itself a "must buy" for online advertisers: the "development of a new ad platform designed to simplify online advertising buying and selling" -- an advertiser-publisher exchange that Yahoo President Sue Decker spoke of at last month's Interactive Advertising Bureau meeting in Phoenix -- as well as its improved Panama search-advertising platform. The portal also asserts that it is the second-largest sponsored-search provider.

"Yahoo is positioned for accelerated financial growth -- we have a powerful consumer brand, a huge global audience and a highly profitable operating model," co-founder and CEO Jerry Yang said in a statement. Roy Bostock, chairman of Yahoo's board, added: "This is a scale business and our scale is a tremendous strategic asset." (A reason, it might be added, why Microsoft continues to argue a combination would be better.)

Yahoo also cited its Asian holdings, including Yahoo Japan and the Chinese auction and e-commerce business Alibaba Group, as giving it a strong cash position.
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