Yahoo reported its quarterly earnings today, beating previous analyst estimates. It's probably the most important earnings report Yahoo has ever had to make, since a weak showing would almost certainly lead investors to agree to a speedy acquisition by Microsoft at its current $31 per share offer.
Yahoo reported $121 million operating income on $1.35 billion in net revenues. Earnings per share of $0.11, above $0.09 estimates.
"We believe we can significantly accelerate our revenue growth, return to our historically high margins, and double our operating cash flow by 2010," co-founder and CEO Jerry Yang said in a statement. "This quarter's solid performance underscores the fact that we are executing on that plan. Yahoo! is beginning to realize the benefits of the very substantial and deliberate long-term investments we've made to capitalize on the opportunities ahead in display and to recapture momentum in search.”
Microsoft's three-week ultimatum to Yahoo expires this weekend. After that point, Microsoft CEO Steve Ballmer has said the gloves will come off, and Microsoft will take its case directly to shareholders in a proxy fight.
Yahoo is still not out of the woods, since its full-year revenue guidance remains the same, though its operating income guidance was upped by $50 million.
Ballmer already began minimizing the importance of Yahoo's earnings before they were even reported. "We think we can accelerate our strategy by buying Yahoo and will pay what makes sense for our shareholders," Ballmer said earlier today at an MSN launch event in North Africa. "I wish Yahoo all the success with its results but it doesn't affect the value of Yahoo to Microsoft."