Brand-new Chief Executive Carol Bartz deserves exactly zero blame or credit for the fourth-quarter financial results Yahoo will announce Tuesday afternoon, but the judgment of her abilities will begin in earnest when she bears the Internet pioneer’s tidings. That’s because Bartz so far has spent only 20 minutes on the phone with analysts as Yahoo’s CEO, much of that spent setting a straight-talking, no-nonsense tone while avoiding any real discussion of Yahoo’s position. The post-earnings call will be her opportunity to share her first assessment of the company and any plans she has for it. However, one source familiar with Yahoo’s plans for the call cautions against expecting some detailed recipe for turning around the company. Yahoo may have hired Bartz with relative alacrity, but the source said it’s still “way too early” for her to reveal more than a few hints at what she has in mind for the company. Bartz has the formidable task of rebuilding Yahoo before her. Former CEO Jerry Yang worked at it for a year and a half, laying some foundations such as Yahoo Open Strategy and the Apt system for handling display ads, but Yahoo now must show progress in actually improving revenue, net income, and share price. Worse, the company must do it during a recession. Analysts surveyed by Thomson Reuters expect gloomy news. Revenue, excluding ad commissions called traffic acquisition costs paid to publishing partners, should drop 2 percent to $1.37 billion. Earnings per share, excluding various items, are expected to drop 14 percent to 13 cents per share. One of the big trends to check is how well Yahoo is doing with its two kinds of advertising. First is search ads, the sponsored text that appears next to search results and the market Google dominates. It was a relative bright spot in Yahoo’s third quarter, Google was relatively unaffected, and Microsoft reported its search-ad revenue grew double digits in the fourth quarter, so this could offer some modest grounds for optimism. Second is display ads, the typically graphical variety that Yahoo relies on much more heavily. Unlike search ads, which advertisers pay Yahoo for only when users click them, display ads cost money when they’re shown. That makes it harder to attribute revenue directly to them, so advertisers who depend on a provable return on investment get cold feet faster during tough economic times. “We think display performance will be weak, but estimates already reflect this,” said J.P. Morgan analyst Imran Khan and his colleagues in a research note Monday. And things just get worse in the future: The outlook for the first quarter of 2009 is “likely to be poor,” Khan said. “With so much uncertainty surrounding fiscal 2009, we think advertisers will be most conservative with ad spend in the first quarter.” Analysts, shareholders, and press won’t be the only ones looking for signals Tuesday. Yahoo employees also likely will be eager to watch the show. So far, Bartz’s internal mass communications haven’t been too revealing. The only really meaty part of a memo sent after Bartz’s first week, according to a copy posted by Kara Swisher at All Things D was this edict: “I wasn’t too happy to see some ‘inside sources’ quoting my all-hands comments to the outside press–STOP IT!” Employees got a taste of fiscal discipline early in Bartz’s tenure: Yahoo suspended pay raises last week. Work on that plan began before Bartz arrived, but she was involved in signing off on it, according to a source familiar with the situation. Freezing salaries rarely helps morale, but neither do diminishing profitability, commercial irrelevance, and more layoffs, so the move isn’t a surprise under the circumstances. The biggest unknown for Yahoo is the extent to which the company will go it alone. Here, again, don’t expect much guidance from Bartz yet. Yahoo famously spurned a $33-per-share acquisition offer from Microsoft last year, and having Bartz now in charge could well facilitate some sort of Microsoft deal. But don’t bet on any news in this department Tuesday. Microsoft has moved more toward acquiring just Yahoo’s search assets, and The Wall Street Journal quoted Bartz during an employee meeting as saying her “gut” leaned against it. In any event, there are plenty of board members at Yahoo who were also disinclined last year to sell the search asset, so Bartz isn’t the sole factor. Having the Microsoft possibilities gives Yahoo investors something of a security blanket, if not a guarantee of a big return. And Bartz’s arrival notwithstanding, some believe it’s still how the Yahoo saga will end. “While fundamentals remain challenging for the company, the possibility of a merger or accretive deal with Microsoft keeps a floor in the stock,” said American Technology Research analyst Rob Sanderson. “We continue to believe this is the ultimate outcome.” (credit: www.news.cnet.com)