NEW YORK (Reuters) - Yahoo Inc disclosed on Tuesday revenue forecasts ahead of Wall Street expectations for 2009 and 2010 as it tries to convince investors it deserves a higher takeover offer from Microsoft Corp.

Shares of Yahoo, which also reaffirmed its financial forecasts for the first quarter and full-year 2008, rose 5.4 percent to $27.24 in morning trading on the Nasdaq. Microsoft gained 2.5 percent to $29.

Microsoft has shown no public sign of sweetening its bid, now worth about $42 billion. A recent Reuters poll showed many analysts expect the software maker to prevail in the Yahoo takeover without making a higher offer.

But Yahoo argued on Tuesday that its acceptance of an offer would immediately propel several key businesses for Microsoft.

"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.

Yahoo said it first presented the financial view to its board on December 2007, well before Microsoft made its offer public on February 1. It released the data on Tuesday to show investors why Microsoft's offer undervalues the company.

Yahoo said it believes it can nearly double operating cash flow to $3.7 billion in 2010. It forecast a rise in revenue, excluding payments to affiliates, to $8.8 billion from an estimated $5.7 billion this year.

The forecasts are based on revenue and cash flow growth that outpace median estimates from six analysts for both 2009 and 2010, according to the Yahoo investor presentation filed with the U.S. Securities and Exchange Commission.

Key growth areas for the company include Internet display and video advertising, where it expects $1.9 billion in added revenue over the next three years, excluding payments to affiliates.

It also expects $1.4 billion in added search revenue, a growth rate that would keep it in line with the market as a whole. These and other factors would provide immediate benefits to Microsoft if a deal was reached, the company said.

Yahoo said its assets would move Microsoft from a "sub-scale" position in Internet search and display, enhance its foothold in Asia and potentially shift a loss-making online business to significant profitability.

"Yahoo provides meaningful strategic value and warrants a significant acquisition premium above its equity value in a potential change of control transaction," the company said.

Yahoo estimated the market value of holdings in Asia at about $9 per share, not including private assets of China's Alibaba Group. It said its board is continuing to evaluate all of its strategic alternatives.

(Reporting by Michele Gershberg, editing by Gerald E. McCormick and Dave Zimmerman)