• Silicon Alley Insider, Tuesday, March 18, 2008 11:45 AM

In what surely must be its final attempt to stave off a Microsoft acquisition, Yahoo on Tuesday issued a press release dispelling concerns that first-quarter earnings will be a disaster. The company also laid out a long-term growth plan that includes cash flow acceleration in 2009 and 2010 and provided details as to why Yahoo believes it's worth at least $40 per share. The plan provides pundits with a benchmark for evaluating Yahoo's future performance. In the end, Blodget says the plan should help Yahoo extract a few more dollars per share from Microsoft.

Yahoo is projecting 2010 revenue of $8.8 billion on operating revenue of $3.7 billion, up from 2007 revenue of $5 billion and operating profit of $2 billion. Assuming that the market would pay between 20 and 25 times 2010 earnings for the Web giant by the end of 2009, the company would be valued at approximately $70-85 billion, or $50-$60 per share-provided it hits its targets.
,br> However, to get to that figure, Yahoo makes three big assumptions: that display and video advertising grows to $1.9 billion over the next three years; that search grows to $1.4 billion; and that operating cash flow increases by four points to 42 percent of revenue in 2010.

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