Yahoo! Expects 25% Growth in ’08, ’09

NEW YORK Looking to encourage Microsoft to raise its $42 billion bid to acquire the company, Yahoo! made public Tuesday a 35-page document prepared mostly in December that predicts a rosy growth scenario for the Internet giant.

Yahoo!, led by CEO Jerry Yang, is predicting that revenue — minus traffic acquisition costs — will grow 25 percent this year and 25 percent again next year to $8.8 billion in 2010 and that operating cash flow will nearly double in that time frame to $3.7 billion.

The three-year overview, first presented to Yahoo!’s board three months ago — before Microsoft’s bid — makes the case that Wall Street analysts are underestimating Yahoo!’s near- and long-term potential.

The company said that “key sources of projected growth” include $1.9 billion in revenue, minus traffic acquisition costs, during the next three years courtesy of “display/video advertising” and $1.4 billion in added search revenue, representing growth that should mirror that of the industry.

“The company is clearly laying out a very optimistic scenario,” said RBC Capital Markets analyst Ross Sandler, who called the guidance “lofty expectations.”