As stated in my April 21st post on TradeMediaBlog, the world was watching for Yahoo!’s results on April 24th and they just weren’t that great.

Mass media reported solid revenue and profit growth but if you looked a bit closer you soon realized that most of this lift was provided by a one-time gain from the sale of Alibaba.com (1688.hk) stock.

Yahoo, owner of the second most popular Internet search engine, said first-quarter net income rose to $542.2 million, or 37 cents a share, helped by a $401 million gain from the initial public offering of China’s Alibaba.com. The company’s forecast for the current quarter was in line with analysts’ estimates.

Microsoft released mixed earnings April 24th but is looking even more aggressively at how to bring Yahoo! closer to an agreement - even if by force.

While many analysts call this threat a posturing move, we at TradeMediaBlog.com believe Microsoft will ulimately win this fight as Yahoo! does not have anymore Alibaba.com stock to sell and a partnership with Google would ultimately kill their search business as it did AOL.

A focal point of these discussions will be Yahoo!’s earnings lifesaver Alibaba.com and its parent Alibaba Group. Microsoft wants Yahoo! and you better believe that they also want Yahoo!’s 39% stake in Alibaba Group, whose valuation, according to analysts TradeMediaBlog.com has spoken to, begins at US$20 billion.

Either way, it will be an interesting next few weeks as the gloves are coming off in the West with the East watching carefully.