Yahoo expects 25% growth in '08, '09

Firm expects 25% growth in '08, '09

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% this year and 25% 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-term 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."

The Yahoo document also outlined how the firm could help Microsoft if the latter were to acquire the former. Yahoo, for example, would make Microsoft a much bigger player in China and Europe and transform Microsoft's online efforts from a money-loser to a moneymaker.

According to the document, Yahoo boasts 305 million unique monthly users to its homepage and 262 million unique monthly users of Yahoo mail.