A Citigroup analyst upgraded Yahoo stock to a buy today, predicting that Microsoft will raise its buyout bid from $31 per share to $34, MarketWatch reports. Acquiring Yahoo is the only way for Microsoft to successfully compete with Google for online advertising, said analyst Mark Mahaney, and so “the likelihood of Microsoft walking away from the deal is small."
In light of Google’s recent acquisition of DoubleClick, "No other step could potentially address the scale/liquidity challenge of Microsoft's ad platform," Mahaney continued. Yahoo may flirt with Time Warner or other buyers, MarketWatch notes, but mainly to force Microsoft to beef up its offer; Rupert Murdoch's News Corp. says it's not interested. (Read more Microsoft stories.)