Yahoo!, the online search group, sought yesterday to apply new pressure on Microsoft to raise its hostile takeover offer, after outlining a rosy outlook for the next two years.

Yahoo! tried to convince shareholders that the company was better off on its own, rather than succumb to a $41 billion (£20.5 billion) takeover by Microsoft. Yesterday Yahoo! shared its internal revenue projections with shareholders and claimed that, according to numbers drawn up in December, the board expects sales to rise by more than 70 per cent over the next three years. That would see total sales of $8.8 billion by 2010.

The projections were interpreted by Wall Street as evidence that Yahoo!’s attempts to team up with another media, technology or telecoms group were not going well and that the online group was either trying to push Microsoft to raise its offer or trying to convince shareholders that independence would be the best option.

At the beginning of February, Microsoft sent a letter to the Yahoo! board outlining its proposals to offer $31 a share, payable in cash and shares. At the time, the deal valued Yahoo! at $44 billion – a 61 per cent premium to the Yahoo! share price the day before the approach was made public.

Some Wall Street analysts believe that Yahoo! may settle for Microsoft changing the terms of its offer by agreeing to pay the lot in cash.

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