Yahoo!'s (NASDAQ: YHOO) shares hit another multi-year low, trading down to $15.54, off by more than half from its 52-week high of $34.08. That high was driven by a buyout offer from Microsoft (NASDAQ: MSFT), but Yahoo! now trades well below the level where it changed hands before Redmond came calling.

Yahoo!'s market cap is below $22 billion. By some estimates its ownership of Yahoo! Japan and Chinese e-commerce company Alibaba are worth $10 billion. That means that Yahoo!'s core business trades at only two times sales, a remarkably low figure.

Two fears have pushed Yahoo! down. The most obvious is that its share of the search market in the U.S. has fallen to about 20% and continues to drop. It may form a partnership with Google (NASDAQ: GOOG) to push up its revenue in this arena, but the deal is being challenged by antitrust authorities.

The major reason behind Yahoo!'s drop is one that would tend to push the shares down more over time. Wall Street has believed that internet display advertising, Yahoo!'s key revenue business, would continue to grow at rates of more than 20% for the next several years. Recent evidence is that many marketers do not consider online display ads to be very effective, maybe even less effective than TV. Some large internet firms have watched their growth rates drop to single digits.

Yahoo! may be up against a problem that has no easy solution.

Douglas A. McIntyre is an editor at 247wallst.com.

Yahoo! (NASDAQ: YHOO) yesterday posted its lowest price in nearly five years. The stock moved to $17.75, down from a 52-week high of $34.08.

The Wall Street Journal pushed the idea that this was an options play. "Trading in Yahoo options leapt to four times the normal level as investors picked up 168,000 calls that allow them to buy the company's stock." In other words, some traders are willing to gamble that the shares will go up.

But, they won't go up. There is growing evidence that marketers prefer search internet ads to display advertising. Yahoo! sells a great deal of display inventory and is a distant second to Google (NASDAQ: GOOG) in search. Some of that may change as Yahoo! begins to use the Google system to create its search results.That may not offset the fact that Yahoo! probably has as much display advertising availability as any company in the world.

Because Yahoo! has shown it is unwilling to make major cost cuts, a flattening of its revenue growth would be a disaster for its investors. The firm's year-over-year sales improvement is already barely above 10%. What had been a growth stock three or four years ago has now become a buyout gamble. Investors still hang on to some hope that Microsoft (NASDAQ: MSFT) or a large media company will make an offer for the portal company.

That means that Yahoo! still carries a "takeover" premium, which begs the question of where the shares might trade at the end of the year, if there are no offers. Investors are gambling that there is a 30% chance that Yahoo! will be bought, if it is not, the stock heads toward $13.

Douglas A. McIntyre is an editor at 247wallst.com.

All eyes will be on Yahoo Inc. (NASDAQ: YHOO) as it reports quarterly results later today.

Analysts are expecting profit of 9 cents on revenue excluding payments to partners of $1.32 billion, according to Thomson Financial. But that is secondary.

Wall Street wants Yahoo Chief Executive Jerry Yang to prove why the Internet portal is worth more than the $31 per share Microsoft Corp. (NASDAQ: MSFT) has offered. To say investors are skeptical that the Sunnyvale, Calif.-based company can do any better is an understatement.

"They're just trying to save some face and extract some value out of it for shareholder," said RBC Capital Markets analyst Ross Sandler in an interview with Bloomberg News.

Indeed, Bloomberg points out that Yahoo's net income probably fell for the ninth straight quarter. Microsoft CEO Steve Ballmer said that the results -- whatever they may be -- won't affect Yahoo's value to the software giant. Though he hasn't ruled out LOWERING Microsoft's bid, chances are remote that will happen.

Will Time Warner Inc. (NYSE: TWX) beat Microsoft Corp. (NASDAQ: MSFT) for Yahoo Inc. (NASDAQ: YHOO)?

According to the Wall Street Journal, talks between the two companies have "heated up recently." Maybe the discussions have obtained a heightened sense of urgency now that Microsoft CEO Steve Ballmer has threatened to make his company's unsolicited bid for Yahoo hostile. Ballmer has given Yahoo until April 26 to respond to the offer. No doubt that deadline will not be the last line in the sand to be drawn.

I still give Microsoft the edge in this contest. The software maker wants Yahoo in the worst way, offering $44.6 billion, or $31 per share, for the beleaguered Internet portal. Time Warner also is under pressure from shareholders to turn around AOL. But unlike Microsoft, it doesn't feel the force of Google Inc. (NASDAQ: GOOG) breathing down its neck. I would be surprised if Time Warner would match Microsoft's offer for Yahoo.

I also sincerely doubt that Time Warner shareholders would jump for joy if this deal were to happen. While merging Yahoo and Time Warner's AOL makes sense on some level, it would do little to boost the media conglomerate's share price unless it was accompanied by a spin-off. The headaches such a deal would create would be enormous. Merging MSN and Yahoo would be no picnic either.

Even in a Microsoft/Yahoo deal, MSN would likely cease to exist. Advertisers would never tolerate the duplication of content if Microsoft were to buy Yahoo. Shareholders, who argue that Microsoft is wasting its time chasing Google, wouldn't tolerate it either. Massive layoffs at MSN would result to keep shareholders off Microsoft's back.

Ballmer needs to remember the ancient proverb of being careful what he wishes for because he might get it.

Freelance writer Jonathan Berr edits the blog Ketchup and Eggs.

Yahoo! (NASDAQ: YHOO) may have a better foothold in Asia than any other large internet company. This is driven by its holdings in Yahoo! Japan and Chinese e-commerce company Alibaba. According to The Wall Street Journal, "Depending on how their value is calculated, the stakes account for $9 billion to $14 billion of Yahoo's value."

The valuations are old news. What is not so old is that it is dawning on Microsoft (NASDAQ: MSFT) that having Asian allies may help the company fight off Google (NASDAQ: GOOG) in the fast-growing markets of the Far East. It is something that the world's largest software company does not have now.

The Yahoo! board has a unique opportunity to talk up the strategic value of these holdings with shareholders in public and with Microsoft in private. The prevailing wisdom is that Yahoo! has no alternative other than to sell to Redmond, and that the price is the issue. Yahoo! management should be saying that the Microsoft bid does not take into account the value of having powerful partners in Japan and China and that these are worth several more dollars a share.

It is an argument that has the benefit of being true.

Douglas A. McIntyre is an editor at 27wallst.com.

Yahoo! Inc. (NASDAQ: YHOO) Chief Executive Jerry Yang is going to have to convince investors that the company he helped found in 1995 still matters when it reports fourth quarter results later today. It's not going to be easy.

The most visited Web site is expected to report its eighth straight quarter of declining profit. according to Bloomberg News. Analysts surveyed by Thomson Financial are expecting an average profit of 11 cents on revenue of $1.41 billion. Expectations, to put it kindly, are real low.

The view of Sanford Bernstein analyst Jeffrey Lindsay quoted by Bloomberg that Yahoo ``just isn't generating anything like the resources they need to really stay in the game" is typical. Yahoo shares have plunged more than 27% over the past year.

Unfortunately, Google Inc. (NASDAQ: GOOG) isn't the only company taking a bite out of Yahoo which trails the search engine giant in every conceivable metric. Social networking sites such as Facebook continue to siphon away young users coveted by advertisers as are smaller niche sites, forcing Yahoo to offer rate discounts to advertisers.

Google (NASDAQ: GOOG) already has the lion's share of online search ads, but just to rub that in, it will introduce a program that may make its products seem even more attractive to advertisers.

The new program will allow marketers to put tiny websites, called widgets, across the Google AdSense Network, which covers the partner sites that run the search giant's text ads. According to The New York Times: "the new widget ads represent a more aggressive push by Google to attract big brand advertisers who like flashy ad units rather than the simple text ads commonly run in Google's ad network."

The widgets will allow Google's customers to run small videos or host chats within their advertising units. According to comScore almost half of US Internet users try widgets. That is 87 million people.

Will the widgets work? Probably not. At least not anytime soon. They allow advertisers so much freedom in creating new marketing messages that it may take months, or even a year or two, for big brand advertisers to measure which kinds of creative units play well with users.

The new Google program is helping make Internet advertising a lot more complicated. And, for now, that may not be good. Every marketer is going to have to work harder to come up with something that will catch people's attention.

Douglas A. McIntyre is a partner at 247wallst.com.