Do Or Die Week For Yahoo

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gun1.pngThis is it. Yahoo’s final week to negotiate with Microsoft, or find a better bid, before the proxy battle begins. The company has until Saturday to respond to Microsoft’s offer. A lot can still happen before then.

Yahoo announces earnings tomorrow, and the conference call should be a lively one. Yahoo will certainly be asked about its test with running Google ads on its search results, and about any counteroffers from Time Warner/AOL. We will be liveblogging the call here, starting at 2PM PT.

Meanwhile, the posturing has already begun. Rupert Murdoch, Yahoo’s white-knight-that-wasn’t, is still hinting that he might throw his weight behind a Microsoft bid. On Monday, at a speech he gave, he said, “I certainly can’t afford to bid against Microsoft (for Yahoo).” And when asked directly if he would join Microsoft in its bid for Yahoo, he didn’t rule out the possibility.

Will Yahoo finally pull the trigger on a deal, or will it let someone else do the shooting?

Update: The buzz is that Yahoo will pull out all the stops this quarter and beat the consensus earnings estimates of $0.09 a share (which, of course, has been revised down from $0.11 a share a month ago) and consensus revenue estimates of $1.32 billion. If it does have an unusually good quarter, that could also strengthen its negotiating position with Microsoft, even though Steve Ballmer is trying to play down that possibility.

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