Since Carol Bartz joined Yahoo (YHOO) as chief executive officer in January, she has been busy cleaning house, streamlining expenses and trying to turn the struggling search company around. In the process, she has reduced the employee count by five percent, or 700 people. Industry watchers see these moves as an effort to close a deal with Microsoft (MSFT); this could happen as soon as this week, according to All Things Digital.
But how will all this effect earnings? With Yahoo set to announce its second quarter earnings after the market closes today, it seems possible that Bartz's efforts may actually result in a nice surprise for investors. My view: Investors should temper any enthusiasm with a clear dose of reality: Yahoo operates in a tough market that is dependent on advertising; chances are, there will be no good news on this front.