Why didn't I think of this?

Instead of paying attention to Yahoo!'s (Nasdaq: YHOO) quarterly report on Tuesday as a gauge of the health of Microsoft's (Nasdaq: MSFT) bid for the company, I should have instead pitched a tent before Mr. Softy's quarterly report last night.

After all, Yahoo!'s report would be a fair measuring stick as to how much the company is worth, but Microsoft's performance would dictate how desperate the software giant is in nabbing Yahoo!.

Stagnancy has finally hit Microsoft. Revenue inched just 0.4% higher to nearly $14.5 billion. Earnings per share fell from $0.50 to $0.47, and EPS would have been worse if the company hadn't spent the past few quarters aggressively buying back its shares.

The really sad part is that the company was saved by brisk sales of its Xbox 360 consoles. The Xbox saving Microsoft's waning software sales -- imagine that.

One can argue that things aren't really so bleak. There are always hiccups in the software upgrade cycle. However, even if Microsoft bounces back, it's clear that the company needs to diversify. But Yahoo! may not be the answer. Two laggards don't necessarily add up to a leader. In any case, it's clear that Microsoft's next major purchase will have to turn both heads and prospects.

News to go
Yahoo! and Microsoft may be dot-com slowpokes, but things get a lot headier when you travel to China to check up on Baidu.com (Nasdaq: BIDU). China's leading search engine posted healthy first-quarter results, with revenue and earnings soaring 108% and 72% higher respectively. Remember when stateside search-engine rock stars used to grow that fast?

Speaking of Yahoo! -- which is becoming the Kevin Bacon of this morning's commentary -- the company struck a three-year deal with CNET Networks (Nasdaq: CNET). The partnership will find CNET promoting Yahoo!'s toolbar app throughout CNET's Download.com. CNET's tech content will also be syndicated on Yahoo!'s site. The two companies will also cross-sell online advertising. During CNET's conference call last night, CNET pegged the deal as generating roughly $100 million in incremental and high-margin revenue for CNET. It's a sweet and timely deal for CNET, given that it also posted lackluster quarterly results last night in which losses narrowed but revenue inched just 3% higher. What's that about two laggards not adding up to a leader?

The American Express (NYSE: AXP) earnings report? Don't leave home without it. The financial giant saw revenue net of interest expense climb 11% higher in its latest quarter. Higher cardmember spending helped fuel the gains, though margins weren't kind as profits dipped slightly for the period. What's more troubling, that folks are spending more in this tricky economic climate or that Yahoo! didn't sneak a cameo into this story?

Finally, Ford (NYSE: F) was downgraded by Bear Stearns this morning, despite surprising investors with a profitable quarterly report yesterday. Talk about playing to a tough crowd. Here are a few suggestions for Ford's turnaround mantra:

  • Ford Focus: Not just a car, but a serving suggestion.
  • Pick up the game in pickup trucks.
  • Our cars can play Michael Bolton while our shareholders are simply bolting.
  • Plan B is to bring back the Model T. 

Have a great day out there.