(03-18) 14:05 PDT SUNNYVALE -- Yahoo Inc. painted a picture Tuesday of smashing financial success over the next three years to bolster its argument that Microsoft Corp.'s takeover bid substantially undervalues the Web portal.

The forecast's release in a regulatory filing was intended to convince investors that Yahoo has a bright future as an independent company, despite a series of recent struggles. But many analysts reiterated that a merger with Microsoft is a foregone conclusion, and that the report was merely a tactic to get its suitor to raise its bid, currently valued at $41 billion.

"We think this is another way for Yahoo to try to build their negotiating position prior to sitting down to private discussions with Microsoft," said Clayton Moran, an analyst with Stanford Group. "Clearly, it's an aggressive forecast that puts them in a best light."

Most immediately, the Sunnyvale company reaffirmed its financial outlook for the first quarter of 2008 and full year 2008, putting to rest recent concerns that its business is tanking. Investors have speculated that the nation's economic turmoil may torpedo Yahoo's business, which is largely dependent on online advertising revenue.

More long-term, the three-year financial plan offers the most detailed glimpse yet of how Yahoo's executives think they will steer their company in the future. Generally speaking, their view is that investors are underestimating their company's potential to increase growth, given its size, iconic brand and recent acquisitions.

Operating cash flow, an important financial measure, is expected to nearly double during the next three years to $3.7 billion, according to Yahoo. Revenue, excluding payments to Web sites in an online advertising network, will reach $8.8 billion in 2010, a 72 percent gain from last year, the company said.

"Yahoo is positioned for accelerated financial growth - we have a powerful consumer brand, a huge global audience and a highly profitable operating model," Jerry Yang, Yahoo's chief executive, said in a statement.

Display ads, the equivalent of online billboards, and video ads are key to Yahoo's growth strategy. Increases in search engine advertising also will play an important role.

Yahoo expects modest growth in overall revenue during the next two years, excluding payments to partner Web sites, followed by 25 percent growth in 2009 and 2010.

Several analysts questioned whether Yahoo could meet its aggressive outlook, given its failure to do so in the past. They called the forecast a best-case scenario that will require turning the business around in a difficult economic environment.

"Judging by recent history, we remain skeptical of Yahoo's ability to execute smoothly against this plan," Jordan Rohan, an analyst with RBC Capital Markets, said in a research note. "If the overall economy and the online advertising space were in a healthier place right now, we would have more confidence."

In addition to providing a financial outlook, Yahoo said that investments in Asia, which are not reflected on its balance sheet, add a great deal to its overall value. The investments, in Chinese e-commerce giant Alibaba Group, and in Yahoo Japan, among others, are worth $12.6 billion, or the equivalent of $8.97 to Yahoo's shares, Yahoo said.

In the aftermath of the outlook's release, Yahoo's shares closed at $27.66, up 7 percent. Microsoft's were up $1.12 to $29.42, up 4 percent.

Yahoo is showcasing its forecasts this week in meetings with big investors during which Yang and Sue Decker, Yahoo's president, are explaining the rationale for rejecting Microsoft's unsolicited takeover offer. Yahoo's board first saw the financial plan in December 2007, at least a month before Microsoft made the bid.

Unwilling to take no for an answer, Microsoft is pressing ahead with plans to acquire its rival and is preparing to nominate a more merger-friendly slate of directors. The threat of a hostile takeover is intended to pressure Yahoo to the negotiating table to avoid a distracting proxy fight.

Microsoft originally offered $31 per share for Yahoo. But the bid now stands at around $29.49 per share because it is partly pegged to the value of Microsoft's stock, which has declined.

Analysts said Tuesday that Yahoo had dwindling alternatives to a Microsoft merger, but nonetheless may be able to squeeze out a few extra dollars per share from the Redmond, Wash., software titan. No formal negotiations have taken place, although the two companies held informal discussions last week during which Microsoft lobbied for the deal.

Roy Bostock, Yahoo's chairman, said Tuesday that Yahoo is continuing to evaluate its options.

E-mail Verne Kopytoff at vkopytoff@sfchronicle.com.

This article appeared on page C - 1 of the San Francisco Chronicle

Gridlock on the roads, snow and delays on the trains - Britain braves its worst ever Easter for traffic congestion

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Those heading off this afternoon were advised by motoring organisations to allow 50 per cent more time for their journeys - as the gridlock was expected to peak just after lunchtime. Scroll down for more...

Thousands of train passengers tried to beat the rush and expected chaos this afternoon by taking earlier services.

And to add to the misery, a Siberian cold snap is due to hit Britain as the weekend gets under way.

RAC research has revealed that the credit crunch is taking its toll with nearly half (43 per cent) of motorists less likely to travel abroad this Easter compared with last year.

And if that isn't bad enough, there will also be northerly winds sweeping in with wintry showers.

One reason for the expected traffic chaos is that many schools have reorganised their holidays, and the early Easter falls in term time.

As a result parents will be making a getaway as soon as school ends today, and traffic is also expected to be heavy late on Easter Monday as families rush back for school again on Tuesday.

Another factor is that amidst fears about the credit crunch, holidaymakers are shunning foreign shores in favour of holidays in Britain.

RAC research has shown nearly half of motorists are less likely to travel abroad this Easter compared with last year.

Scroll down for more...

Gridlock: This Easter is expected to have the worst ever traffic congestion

The AA's Routeplanner said key destinations would include Alton Towers, Longleat, Thorpe Park, Legoland, Drayton Manor and Warwick Castle as well as Brighton, Bournemouth and Blackpool and the historic cities of Oxford and Cambridge.

Neil Thompson, from the RAC, said: "Easter is always one of our busiest periods of the year, but this Easter's getaway is expected to be more intense as motorists shun foreign travel in favour of domestic driving holidays.

"This combined with the short break for Easter will lead to a nightmare Maundy Thursday for motorists especially if the bad weather hits.

"Our advice is to leave extra time for journeys and, where possible, try to get away a few hours early to beat the rush."

AA patrolman of the year Adam Ashmore said: "Motorists might be under the impression that, due to the very early timing of Easter this year and the fragmentation of school holidays, the roads will be much quieter than usual, but we don't expect this to be the case.

"This year everyone hitting the road for an Easter break will be setting off at the same time and on similar routes region by region so congestion could potentially be worse than usual."

Tom Wright, chief executive of the national tourism agency VisitBritain, added: "The current economic outlook could mean British resorts are bracing themselves for bumper visitor numbers this Easter.

"Many families with school-age children have only four days to enjoy their Easter break this year so we're going to experience a concentrated few days of domestic travel.

"There's a real opportunity this year for Brits to rediscover what's on their own doorstep - just make sure you leave enough time to get there." Rail passengers face chaos, delays and cancellations to services over Easter as Network Rail carries out engineering work that will see shut-downs, closures and relief bus services on major lines.

After the serious New Year work overruns, Network Rail is under intense pressure to ensure the Easter projects are completed on time.

Euston station in London will be closed to Virgin West Coast services on Saturday, Easter Sunday and Easter Monday.

If the weather conditions are bad, motorists are advised only to make journeys that are necessary and if they do travel to take extra precautions.

They are urged to carry spare warm clothes, food and drink and ensure that mobile phones are fully charged in case of emergency.

Patchy frost is expected on Friday, and parts of Scotland could see temperatures as low as -3c or -4c on Saturday.

Around 2,027,000 passengers will fly in and out of BAA's seven UK airports - Heathrow, Gatwick, Stansted, Southampton, Aberdeen, Edinburgh and Glasgow.

Good Friday is expected to be the busiest day, with 428,000 passengers across the seven airports.

Heathrow Airport is forecast to handle 883,000 passengers over the Easter period, with New York, Paris, Los Angeles, Hong Kong and Dubai among the most popular international destinations, and Edinburgh and Glasgow the top-rated UK destinations.

Gatwick Airport is expected to handle 514,000 passengers, with Geneva, Madrid, Barcelona and Orlando among its top destinations.

Around 330,000 passengers are expected through Stansted Airport and Southampton is forecast to welcome 24,000 passengers.

In Scotland, the capital's airport will handle around 128,000 passengers, and Glasgow Airport is expected to handle 107,000 passengers.

Eurostar is reporting good passenger numbers, with 70,000 leaving the country this way.

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