Looking at Yahoo's first quarter earnings, you gotta wonder why this company can report so strongly, and what magic bullet it employed during the quarter that apparently eluded management over the past two years.

We expected Yahoo

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[YHOO  Loading...      ()   ] to beat the Street for the quarter, and that's what the company did: reporting 11 cents a share on $1.35 billion versus the 9 cents and $1.32 billion respectively that analysts projected. The company's EBITDA earnings also soared to $460 million, against the $435 million analysts anticipated.

But look at the numbers a little more closely, as I'm doing with CNBC desk producer Juan Aruego: Yahoo's GAAP net income includes a $401 million, non-cash gain related to the IPO of Alibaba.com. If you exclude that, as well as a few other one-time items, that brings us to the 11 cent number.

But if you only exclude the Alibaba gain, but include the other one-time items that Yahoo has traditionally included, the net income drops to 10 cents a share, which would only beat the Street by a penny. You can make a pretty good argument that the Street might be going with 10 cents instead. We're talking with Thomson about this, but that's the first read.

Of course, Yahoo's guidance, at first blush, looked huge, but now that I've gotten a chance to read it over, Yahoo's reporting its gross revenue range for the second quarter and full year. I was comparing that against the net revenue range (excluding trafffic acquisition costs) that the Street uses as the comparison. So apples to apples, Yahoo is right in line with expectations for both periods, essentially reiterating its full-year guidance of $7.2 to $8 billion.

It looked a lot better comparing those numbers to the TAC-excluded outlook used by the Street. Which is a bummer. Alas, this is hardly the upbeat, improved outlook Yahoo would need as new ammunition to get Microsoft

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[MSFT  Loading...      ()   ] to increase its offer.

If there is further good news, the company is slightly raising EBITDA by $50 million or so.

Jeffrey Lindsay at Sanford Bernstein tells Reuters, "This is better than the Street was expecting. This might pose some issues for Microsoft. It's less likely Microsoft would succeed with a lower bid. They wouldn't be able to reduce their price."

I don't necessarily see anything that changes the picture all that much, and that might be the reason why Yahoo shares are trickling south once again. Sands through the hourglass in Sunnyvale; Yahoo's days as something other than a Microsoft division are dwindling.

Questions?  Comments?