Yahoo!'s Earnings Are Pivotal in Merger

"If it does go hostile, it's not going to benefit either side," says Pyykkonen, who does not own shares of Yahoo! nor Microsoft.

Pyykkonen agrees, however, that Yahoo! will likely not miss estimates for the first quarter given its recent show of confidence.

Lindsay maintains that if Yahoo! posts a revenue growth higher than the predicted 12%, the company could make a case to shareholders, and Microsoft, that it is on a path toward a turnaround. And with all of Yahoo!'s recent staff reductions and perhaps a stepped-up effort by its sales force these last couple of months, it is conceivable that Yahoo! might do well even in a tough economic environment.

"Regardless how they got there in the first quarter, people would have more confidence," Lindsay says.

If, however, Yahoo!'s revenue growth falls below 12%, the company would see its options quickly evaporate.

"If Yahoo! missed numbers by a good bit, then there's basically a three- or four-day window in which they could take Microsoft's bid," he says.

Shares of Yahoo! were down 2.3%, or 65 cents, to $27.71 in late afternoon trading.

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