To reinforce its argument that Microsoft severely undervalued the company in its $44.6 billion takeover bid, Yahoo Inc. announced that it is on track to meet its 2008 earnings forecast, and that it expects to nearly double operating cash flow to $3.7 billion by 2010.

The company, which hopes to get Microsoft to increase its offer price, forecast a rise in revenue, excluding payments to affiliates, to $8.8 billion from an estimated $5.7 billion this year.

"Yahoo is positioned for accelerated financial growth -- we have a powerful consumer brand, a huge global audience and a highly profitable operating model," Yahoo Co-Founder and Chief Executive Jerry Yang said in a statement.

According to reports, key growth areas for the company include internet display and video advertising, and $1.4 billion in added search revenue.

Analysts believe Yahoo is being overly optimistic. In a Wired report, Bernstein Analyst Jeffrey Lindsay estimates that to justify Microsoft's $31 per share valuation, Yahoo would have to grow sales by 20 percent for at least the next five years. If Yahoo posts a bummer quarter, he says, Microsoft not only would not raise its price, but could withdraw its bid and resubmit it at a lower price.

So far, Microsoft has been standing firm on its current offer.