It’s D-day for Jerry Yang and his beloved Yahoo!.
Not since the first quarter after the marriage of AOL and Time Warner has a quarterly earnings report had so much riding on it as Yahoo!’s does today.
With less then a week to go before Microsoft’s self-imposed deal deadline lapses, the fate of the company Yang built from scratch and turned into an Internet icon hangs in the balance.
Wall Street will be watching the numbers closely and also listening for hints about which way the company is leaning regarding a deal. Investors are also looking to see if Yang announces a partnership with AOL or an expanded search pact with Google, though sources said either is unlikely to be announced today.
“We expect management to have pulled out all the stops to drive up Q1 performance, maximize their value, and make life generally as difficult/expensive for Microsoft as they can,” said Bernstein analyst Jeffrey Lindsay in a note yesterday.
Several sources close to Yahoo! said the company will not blow the lid off earnings, but will likely beat analysts’ expectations of 9 cents a share and revenue estimates, excluding traffic acquisition costs, of $1.32 billion.
Microsoft, which reports its own earnings on Thursday, has threatened that if the standoff isn’t resolved by Saturday, it will bring its bid to Yahoo! shareholders through a proxy contest to unseat the company’s board.
While several meetings between the two sides have occurred since Microsoft boss Steve Ballmer unveiled a $31 per share offer in February, talks have not touched on price, sources said.
Wall Street will also be interested in Yahoo!’s experimental two-week advertising alliance with rival Google, which, if successful, could lead to a broader partnership and give Yahoo! leverage to demand a higher offer price.
Google’s 30 percent jump in first-quarter profit last week puts more pressure on Microsoft to get a deal done quickly because further delays could let Google widen its lead in the Internet search advertising market, Collins Stewart analyst Sandeep Aggarwal said.