Internet and software giant Microsoft may be prepared to raise its bid for Yahoo!, an expert has said.In a recent advisory meeting with clients, Mark Mahaney, an analyst with financial services firm Citigroup, stated that Microsoft will not walk away from a potential deal with the search engine provider and is likely to up its bid from its initial offer of $31 a share.
Earlier this month, Yahoo! outlined a three-year plan that, it claimed, proves that Microsoft's unsolicited proposal "substantially undervalues" the firm.
In a company statement, Yahoo! claimed that its board expects to increase sales by more than 70 per cent over the period and also anticipates generating $8.8 billion in revenue by 2010.
According to Mr Mahaney, Microsoft will continue to pursue a possible deal with Yahoo! because it has yet to make significant inroads in online advertising, especially compared to rival firm Google.
He stated that the only way for Microsoft to compete against Google's dominance in the field would be to acquire Yahoo!.
As well as simply raising the value of its bid, another "possible sweetener" which Microsoft could extend to Yahoo! would be to turn its proposal into an all-cash deal, Mr Mahaney added.
The expert stated: "You take a lot of the risks off the table [if Microsoft] changed it to an all-cash deal; that is $31 a share no matter what happens to Microsoft's stock."
