Yahoo results not seen moving Microsoft

By Eric Auchard

SAN FRANCISCO (Reuters) - Yahoo Inc (YHOO.O) posted a better-than-expected quarterly profit on Tuesday, but failed to do well enough to convince many on Wall Street that Microsoft Corp (MSFT.O) needs to raise its takeover bid.

Yahoo left its revenue outlook for the year unchanged and its shares ticked down about 1 percent in extended trading.

"Microsoft is breathing a sigh of relief," said Jim Friedland, an analyst at Cowen & Co. "Even though these are solid results, given long- and short-term challenges, there's been no overall shift in Yahoo's business.

"Microsoft's offer is still the best offer on the table," he said, adding the software maker could "modestly raise" its $43 billion (21.54 billion pounds) cash-and-share bid just to close the deal.

Mike Binger, fund manager at Thrivent Financial, which owns shares in both Microsoft and Yahoo, said: "I would say at this point Microsoft would stay their bid."

Microsoft has set a Saturday deadline for Yahoo to strike a deal or face a hostile takeover battle and a lower offer. Its top executive on Tuesday signalled nothing Yahoo said about the quarter would change its resolve.

"I wish Yahoo all the success with its results, but it doesn't affect the value of Yahoo to Microsoft," Microsoft Chief Executive Steve Ballmer said during a visit to Morocco, before Yahoo reported its results.

Buoyed by a $401 million non-cash gain on a stake in China's Alibaba.com Ltd (1688.HK), Yahoo's first-quarter net income rose to $542.2 million, or 37 cents per diluted share, from the year-ago quarter's $142.4 million, or 10 cents per diluted share.