Page last updated at 22:45 GMT, Tuesday, 22 April 2008 23:45 UK

Yahoo reports a jump in profits

Yahoo sign
Yahoo says Microsoft's offer is too low

Yahoo, fending off a takeover bid from software giant Microsoft, said its profits tripled in the first three months of 2008.

The internet firm reported income of $542.2m (271.5m) compared with $142.4m in the same period a year earlier.

Yahoo is seeking to prove it is worth more than Microsoft's unsolicited $44.6bn (22.3bn) offer.

But despite beating forecasts, Yahoo's performance did not convince analysts that the firm merited a better bid.

"This is better than (Wall) Street was expecting. This might pose some issues for Microsoft," said Jeffrey Lindsay, analyst at Sanford C Bernstein & Co.

"It's less likely Microsoft would succeed with a lower bid. They wouldn't be able to reduce their price."

Perhaps these figures don't change the game much. Yahoo is still being backed into a corner by its giant unwelcome suitor, and nobody is rushing to its rescue.
Rory Cellan-Jones, BBC technology correspondent

Yahoo's profits were helped by a $401m gain from the sale of a stake in Chinese internet company Alibaba.com.

"Microsoft is breathing a sigh of relief. Even though these are solid results, given long and short term challenges, there's been no overall shift in Yahoo's business," said Jim Friedland, analyst at Cowen & Co.

'Open to all alternatives'

Yahoo chief executive and co-founder, Jerry Yang, said the firm remained opened to forging a deal with Microsoft but it is also continuing to explore other options.

"Our board and management team continue to be open to any and all alternatives, including a Microsoft deal," Mr Yang said.

Earlier Microsoft chief executive Steve Ballmer said the company will hold firm on its offer for Yahoo regardless of whether Yahoo's quarterly results impress or disappoint investors.

Microsoft has warned if its deal is not accepted by 26 April, it would mount a hostile takeover at a lower price.

To frustrate Microsoft's bid or extract a higher offer, Yahoo has sought to strike alliances with other firms.

Earlier this month, Yahoo announced a two-week experiment that will see the firm share advertising space with rival Google.

During the pilot, Google will be able to place ads alongside 3% of search results on Yahoo's website.




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