Give Yahoo management this much: they're making Microsoft work for this one.
Earlier today Yahoo pumped out a supremely confident three-year growth forecast in a filing with the Securities and Exchange Commission. This is the company's latest maneuver in its bid to remain independent--or, failing that, fetch a much higher buyout price from Microsoft. But after paging through the document, I'm still convinced Steve Ballmer's cohorts hold the better cards.
News Corp. has already shot down false rumors that it might ride to Yahoo's rescue and that doesn't leave Jerry Yang with much wiggle room in negotiations. Might Time Warner turn into a white knight? Nope. After AOL wasted $850 million to buy Bebo, that maxed out Time Warner's yearly budget for Stupid Corporate Decision Making.
Here's a link to the slide show, which actually dates back to December. Yahoo looked into its crystal ball and came back with bubbly predictions for a doubling of operating cash flow and revenue and margin results that will outstrip Wall Street's expectations. Given all that's taken place on Wall Street of late, I'm not sure how much stock anyone puts in this sort of nonsense anymore. And who was the comedian they allowed to muck with slide No. 5 which suggests Yahoo is about to transform the industry with its display ad platform?
If Yahoo had a secret weapon in the basement, what has it been doing the last three years--playing Parcheesi? Henry Blodget over at Silicon Alley Insider did the math and says the numbers put up by Yahoo would translate into a stock price between $40 and $50 a share. But as he notes, Yahoo's assumptions about search revenue growing $1.4 billion is incredibly optimistic.
"Yahoo continues to lose query share in search, and we think it is reasonable to assume that Google will eventually capture 80%-90% of global query share. Given that Google's growth rate is essentially the market growth rate, we don't see how Yahoo can expect to grow search in line with the market rate."
I'll say. What's more, Yahoo's done little to suggest it can slow down Google. Let's remember that search continues to be a faster growing business than display ads. Maybe Yahoo can squeeze a buck or two more out of Microsoft, but barring something out of left field, the endgame is approaching. (Last week we reported that the sides had finally opened up an informal channel of communication.)
The immortal technologist Lawrence Peter Berra had it right about it not being over until it's over. But Yahoo shouldn't fool itself into believing its own PR. It's over.