Yahoo fights Microsoft buyout with its own three-year plan

Despite analyst predictions that a Microsoft buyout is inevitable, Yahoo today aimed to drive up shareholder opposition by unveiling a three-year financial plan of independence. This while Yahoo continues to find new revenue sources.

This week, Yahoo has been busy demonstrating it has the most valuable destination on the Web, in an effort to prove the company can -- and should -- stand on its own. This morning, Yahoo followed up that proof with a three-year financial plan for nearly doubling its operating cash flow and generating $8.8 billion in revenue in 2010.

Although Yahoo waited until now to publicly unveil its three-year plan, it was first presented to Yahoo's board of directors in December 2007, more than two months prior to Microsoft's announcement of its acquisition bid on February 1.

On February 13, Yahoo mailed a letter a letter to shareholders aimed at directly fending off a takeover by Microsoft.

"Our goal is to grow visits to key Yahoo starting points and properties, where users enter the Internet, by 15% per year over the next several years. We are the most visited site in the US, and we continue to grow -- we experienced double-digit growth in US users in 2007 on our Yahoo.com home page," Yahoo CEO Jerry Yang wrote in the letter.

Yet in a poll released by Reuters this week, conducted before the filing of Yahoo's plan, all eight Microsoft analysts surveyed said they thought Microsoft would prevail in its takeover attempt. So, too, did 14 or the 15 Yahoo analysts surveyed.

While all that planning and demonstration has been going on, Yahoo has set about trying to generate more revenue already, making a series of targeted product and partnership moves over the past two months which have been receiving mixed reviews from industry observers.

For instance, Yahoo has announced new technology labs in Bangalore, India and Haifa, Israel; a strategic partnership with T-Mobile; a product called OnePlace for managing mobile content; a new "starting point" service known as "Buzz"; and the expansion of its newspaper ad consortium to include one-third of all US newspapers.

In its first three weeks of existence, Yahoo's new Buzz is driving only 10% less traffic to publishers' Web sites than Digg, an entity that is now three years old, according to a study released yesterday by Hitwise.

Also, in a blog posting late last week, Yahoo revealed that it is exploring adoption of semantic Web identifiers in its searches, an approach which differs from that of arch competitor Google. Under semantic search, the meaning of the data on each Web page is analyzed so that its relevance to a single context can be ascertained.

"By supporting semantic Web standards, Yahoo Search and site owners can bring a far richer and more useful search experience to consumers," wrote Amit Kumar, product management director for Yahoo Search.

Critics have charged, however, that many existing Web pages would need to be retagged for semantic search to become really useful.

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