March 18 (Bloomberg) -- Yahoo! Inc., owner of the most- visited U.S. Web site, said sales will climb at least 19 percent in each of the next two years, justifying its refusal of a $44.6 billion takeover offer from Microsoft Corp.

The stock climbed the most since Microsoft's $31-a-share bid on Feb. 1 after Yahoo said sales growth goals for 2009 and 2010 are higher than analysts estimate. That deserves ``a significant acquisition premium'' offer, Yahoo said.

Yahoo pointed to operations in Asia, its No. 2 position in Web search and the potential cost savings of the deal to show it's worth more. Chief Executive Officer Jerry Yang has fought to persuade investors he made the right call as his stock trades at a widening discount to Microsoft's offer.

``This is one more push by them to get a higher bid,'' said Clayton Moran, an analyst at Stanford Group Co. in Boca Raton, Florida. ``This is reflective of Yahoo's alternatives dwindling.'' He advises investors to hang onto Yahoo shares.

Yahoo traded at an 11 percent discount to Microsoft's offer yesterday, signaling investors were concerned takeover attempts might fail. Today the discount narrowed to 6.2 percent, suggesting shareholders now see a deal as more likely.

Yahoo, based in Sunnyvale, California, gained $1.81, or 7 percent, to $27.66 at 4 p.m. New York time in Nasdaq Stock Market trading. Microsoft rose $1.12 to $29.42, pegging the value of its cash and stock offer at about $29.49 a share.

In January, Yahoo predicted annual sales, excluding revenue passed on to partner sites, of as much as $5.95 billion. Today the company reiterated that forecast. Sales in 2009 and 2010 will climb to $7.1 billion and $8.8 billion, Yahoo said in a regulatory filing, topping analysts' estimates.

Asian Strength

Stakes in companies including Yahoo Japan Corp. and Alibaba.com Corp., parent of China's largest online trading site, would give Microsoft an ``important source of growth'' in Asia, Yahoo said. China alone has about 210 million Internet users, equal to less than a sixth of the population.

Yahoo touted its wireless services as another boon for Microsoft, fueling expansion in a market whose sales may grow to as much as $12 billion by 2010. Yahoo's mobile messaging, search and news are the most popular in the U.S. and had 18.8 million users as of December, according to researcher M:Metrics.

Yang, one of Yahoo's co-founders, refused Redmond, Washington-based Microsoft's bid on Feb. 11. He replaced Terry Semel last year after his company lost the lead in Internet advertising and search to rival Google Inc.

Purchasing Yahoo would help Microsoft take second place in U.S. Internet searches, with about a third of total queries. Google leads with about a 60 percent share, according to Reston, Virginia-based researcher ComScore Inc.

Saving Money

Microsoft may save three times more money than first estimated by completing the takeover, Yahoo said, citing information from UBS AG and JP Morgan Securities Inc. Microsoft had projected savings of as much as $1 billion a year from reducing overlap in the companies' operations.

The board is still evaluating ``all of its strategic alternatives,'' Yahoo said today, repeating earlier statements. The company engaged in talks with Rupert Murdoch's News Corp. about a combination to block the Microsoft bid, a person with knowledge of the discussions told Bloomberg News last month. Murdoch later said he wouldn't fight Microsoft for Yahoo.

The lack of another public bidder for Yahoo suggests Microsoft is the sole contender, Moran said.

``There's been no real interest from other bidders,'' he said. ``In the meantime, the economy looks like it's entering a cyclical downturn, and valuations have dropped. Yahoo's options are running low.''

`Aggressive' Forecasts

Yahoo also reiterated that first-quarter sales will amount to as much as $1.38 billion and predicted that cash flow may double to $3.7 billion in the next three years. The ``aggressive'' forecasts may prompt Microsoft to change its bid to all cash, Moran said. That would give the offer a higher valuation and help the deal become ``amicable.'' Microsoft representatives weren't immediately available to comment.

Microsoft sent executives to talk with Yahoo officials last week, their first meeting since the rejection, a person familiar with the situation said then. The talks may signal relations between the two have thawed and that Microsoft may agree to pay more, Morningstar Inc. analyst Toan Tran said last week.

To contact the reporter on this story: Ville Heiskanen in New York at vheiskanen@bloomberg.net

Last Updated: March 18, 2008 16:32 EDT