Tuesday Earnings For Yahoo!

The Yahoo! earnings on Tuesday should prove to be interesting, regardless of whether they meet, beat, or miss expectations. If Yahoo! misses, the handwriting may be on the wall with regard to Microsoft's current takeover attempt and offer. On the other hand, Google's recent results illustrate that click numbers are not nearly as bad as everyone expected. If Yahoo! can show better than expected earnings and beat expectations, the pressure will be on Microsoft to increase its current offer (which is now valued slightly below the original $44.6 billion). Given what is at stake, you can expect Yahoo! to book and include every possible source of revenue in the first quarter. Ironically, in the end this may actually be what is best for Microsoft, allowing it to offer something north of $31 a share, maybe as high as $35 a share, while at the same time saving face as it justifies a higher offer. Let the drama begin, ..... again.

Tickers: MSFT, YHOO