Yahoo! Looks Forward, Hopes for Mercy

SAN FRANCISCO -- With Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks) just a day removed from dodging a nasty proxy fight, you could understand if investors let the company off the hook for what looks to be a poor second quarter.

No one expects much out of Yahoo!, which has spent most of the year distracted by the prospect of a Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks) takeover and the possible removal of its entire board.

Microsoft has since backed off and billionaire investor Carl Icahn reached a compromise with Yahoo! on Monday that would allow three members of his dissident slate -- including himself -- to join the board.

Of course, many shareholders are still bitter at Yahoo! for turning down Microsoft's original offer of $31 a share, as well as its sweetened offer of $33 a share, and they may not be too forgiving if Yahoo! misses estimates by a wide margin on top of everything else.

Shares of Yahoo! jumped to $30 earlier this year from below $20 following Microsoft's offer. As the negotiations turned hostile and a deal became increasingly unlikely, Yahoo!'s stock gradually slid for more than five months, ending Monday's session at $21.67.

Analysts expect second-quarter earnings of 11 cents a share on revenue of $1.37 billion. Yahoo!, which normally provides revenue guidance excluding so-called traffic acquisition costs, has this time included the costs in its revenue forecast of $1.73 billion to $1.93 billion.

Analyst Jeffrey Lindsay of Sanford Bernstein anticipates revenue growth of 13% in the second quarter, slightly less than the 14% growth the company saw in the first quarter.

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