Microsoft CEO Steve Ballmer is well aware of the whispered expectations that Yahoo will beat the street with its first-quarter results this afternoon. In fact, Ballmer already has Microsoft PR pouring cold water on calls for Microsoft to respond with a higher bid. "We think we can accelerate our strategy by buying Yahoo and will pay what makes sense for our shareholders," Ballmer said in a statement. "I wish Yahoo all the success with its results, but it doesn't affect the value of Yahoo to Microsoft." Which is a remarkable display of logic from Ballmer: After all, Yahoo's current stock price doesn't reflect its underlying business performance, good, bad, or indifferent; it's a reflection of Wall Street oddsmaking on whether a Microsoft buy will go through, and at what price.

Whether or not Yahoo decides to begin merger negotiations before Microsoft CEO Steve Ballmer's Saturday deadline will depend on how Yahoo shareholders react to the company's first-quarter earnings report today. If Yahoo beats Wall Street expectations, there's a chance shareholders could drive its share price past Microsoft's $31 per share offer. Essentially, Yahoo shareholders have turned the fate of the company over to Wall Street analysts.

Yahoo reports first-quarter earnings later today. Everyone agrees CEO Jerry Yang has to report better-than-expected numbers if Yahoo hopes to continue fighting for its independence from Microsoft. So guess what? Yahoo is going to report better-than-expected numbers. "In any Internet business, you can pull the stops out in any one or two quarters," Jeffrey Lindsay, an Internet analyst at Sanford C. Bernstein, told the WSJ. "They'd be very crazy not to." If he's getting pressure from Yang, here are three ways for CFO Blake Jorgensen could cook the books for today's report and keep his sanity:

We've boiled Citi analyst Mark Mahaney's expectations for Yahoo's earnings report later today down to three bullet points:

Yahoo will report its first-quarter results tomorrow. CEO Jerry Yang's last message to shareholders, a March presentation in which he promised shareholders a 72 percent revenue increase by 2010, indicates the company will do everything it can to report only good news — even, as BoomTown's Kara Swisher writes, if that means "selling everything not nailed down at Sunnyvale HQ."

In February, ComScore reported underwhelming growth in clicks on Google ads in the U.S. Google shares sank below a 52-week low for the first time in the company's history. Then, yesterday, Google reported 42 percent year-over-year revenue growth, surpassing expectations. Burned, Wall Street traders reacted harshly toward ComScore, dropping the company's shares by 8.4 percent after hours. Today, ComScore wants to remind the world that it never said Google's revenues would sink and that it only measures clicks on Google ads in the U.S., not internationally But really, Google investors owe ComScore a large debt.

Google's first-quarter revenues beat Wall Street analysts' expectations by $101 million — $3.7 billion to their average forecast of $3.59 billion. The stock is up nearly 20 percent today as a result. But that only happened with the help of a sinking dollar, Bloomberg reports. During yesterday's conference call, Google said its revenues would have been $202 million lower if foreign currency rates hadn't risen so sharply against the dollar during the first quarter. Google's actual share of foreign search queries only increased from 62 percent in December to 63 percent in February. "I don't think that kind of foreign currency benefit was expected,'' one fund manager told Bloomberg. Remind us, why do we have stock analysts to begin with? (Photo by klynslis)

Despite turning into a bank, E*Trade retains large offices in the Bay Area. Perhaps set to become smaller. The online broker, embroiled in the market's mortgage mess, missed Wall Street's expectations for first-quarter earnings. [E*Trade]

Pessimism has been replaced by optimism: After Google shares traded down 1.2 percent today, traders responded to the release of Google's first-quarter earnings by sending the shares up nearly 12 percent in after-hours trading, crossing $500. Fear, in short, has been replaced by greed. As I expected, the call was filled with chest-thumping glee from never-modest CEO Eric Schmidt. That's why I listen, by the way — not to hear numbers I could read in analyst reports, but to hear how Google's executives talk about the company on one of the brief occasions that they leave the bubble of the Googleplex. Live coverage, starting at 1:30 p.m. Pacific:

In the first three months, he search giant has increased revenues 42 percent year-over-year, and 7 percent over the last quarter, to $5.19 billion. Net income was $1.31 billion, up from $1.21 billion in the fourth quarter. Live coverage of the earnings call at 1:30 p.m. Pacific. Full press release:

It's the most puzzling thing about the stock market to investing newbies: How can a company like Nokia see its earnings rise 25 percent, but its shares tumble 10 percent? That's because for most tech stocks, Wall Street doesn't care what you've done for it lately; they care more what you're going to do. And Nokia has given a depressing forecast for U.S. sales. The rational response, of course, is to push off all deals as far into the future as possible, and then announce glistening expectations for what's to come. That seems easier than actually running one's business in a rational manner. [WSJ]

Recently anointed eBay CEO John Donahoe thumped his chest over the auction giant's first-quarter earnings. He praised a "diverse portfolio of businesses" as revenues jumped 24 percent to $2.19 billion and earnings rose 22 percent to $459.7 million. The problem: Younger businesses like Skype and PayPal aren't as profitable as eBay's core e-commerce business, which is why profit margins dropped. [WSJ]

Clicks on Google advertisements in March grew 2.7 percent over February. Clicks for the first three months of 2008 grew 2 percent over 2007's first quarter. It's a drastic slowdown in growth. In the fourth quarter of 2007, paid clicks were up 25 percent year-over-year. In the third quarter of 2006, year-over-year growth reached 48 percent. SAI reports that the slowdown has analysts predicting that Google's first-quarter revenues grew 25 percent year-over-year, well below the company's usual pace. Valleywag will have live coverage when Google reports its earnings tomorrow.

It has been almost eight months since Google CFO George Reyes turned in his resignation. (Under pressure and personal disdain, we hear; his fellow executives routinely called him an "idiot" behind his back.) Since then, at least two people have been offered the job and turned it down. Even if Google were to announce a new CFO tomorrow in its earnings call, the delay will have gone past embarrassing and into mystifying. Who wouldn't want to help run the world's fastest-growing big media company, which has minted an army of billionaires? We'd heard rumors that Reyes was digging into matters that CEO Eric Schmidt didn't want him involved in. Did Google's prospective CFOs, once they started going through the books, find something frightening enough to send them fleeing from a dream job?

Intel's profit contracted 12% to $1.44 billion in the first quarter as falling prices for flash memory and higher restructuring costs offset strength in its core microprocessor business. Revenue grew 9.3% to $9.67 billion. [AP]

Oracle's quarterly profit rose 30 percent while revenue climbed 21 percent and margins improved — but the stock is down almost 10 percent in after-hours trading. Why? Growth fell short of expectations. Let this be a lesson to anyone thinking about taking a company public — I'm looking at you Mark Zuckerberg — the public is very unforgiving. You can't rest on your laurels. Companies must come up with new ways to make money that are both profitable and sexy. It's not enough to, as Oracle did, merely buy your competitors.

Shareholders watched Google shares plummet by nearly $300 since peaking last fall. Those investors will hardly be reassured by the cheery news in Google's newly released annual report and proxy statement. The company did earn $13.29 a share, and Valley job-seekers also benefitted: The company added over 6,000 full time employees to its payroll last year. But who's raking in the cash? Not founders Larry Page or Sergey Brin, who only receive equity as income. CEO Eric Schmidt took home a salary of $480,000, slightly less than last year. CFO George Reyes — whom the company is actively trying to oust from his comfortable perch— took home millions in salary and stock last year, as did senior vice presidents Jonathan Rosenberg, Omid Kordestani and Alan Eustace. Here's how they scored:

Dell's profit declined 6.5 percent to $679 million. Restructuring and other charges hurt the computer maker's bottom line. Revenue climbed 10 percent to $16 billion. The company, which has been struggling to reshape itself in the cutthroat computer market, warned future results could suffer as it incurs more restructuring costs and copes with "conservative spending" by customers. [WSJ]

HP posted a 38 percent jump in net income, amid cost cutting and strong demand for its PCs. Sales climbed to $28.47 billion. HP also boosted its outlook. The company hired 2,000 salespeople in the last year. [Barrons]

Comcast reported a 54 percent jump in fourth quarter profits due primarily to increased customer spending and added revenues from acquired companies. Comcast also announced a dividend of 6.25 cents per share for the quarter and said it plans to spend $6.9 billion on share buybacks before 2010.
"We are not spending any time on any of the large transformative acquisitions that have been speculated about, like Yahoo! or Sprint," said CEO Brian Roberts. No official word about small ones like Plaxo. [AP]