Kara Swisher

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Though Numbers Still Down, Wall Street More Bullish on Yahoo’s Fourth-Quarter Earnings Today

While Wall Street expects no huge upswing in Yahoo’s revenue or earnings when the company reports its fourth-quarter results today after the market closes, analysts are becoming increasingly positive about the prospects for the Silicon Valley Internet giant.

Why? Apparently, not-as-down-as-last quarter is the new up!

This makes sense given that Yahoo (YHOO) has had three consecutive declines in revenue of about 12 percent, so any lessening of the bleed is a good thing.

A consensus of Wall Street estimates expects Yahoo to report earnings of 11 cents per share on net revenue–taking out commissions to advertising partners–of $1.23 billion for the fourth quarter. That’s about a 10.4 percent decline in year-over-year revenue.

The improvement could come from the beginnings of a better outlook for display advertising online, an area where Yahoo shines, as marketers started returning to the Web in the quarter.

Not so shiny, of course, is Yahoo’s continued weakness in search monetization and market share. Both have been down.

While Yahoo CEO Carol Bartz’s cost-cutting and streamlining have offset some of the declines over the last year, eventually she will need to show real growth and innovation to investors.

That said, expected cost savings from the online search and advertising deal Bartz struck with Microsoft (MSFT) in July could also improve the bottom line later in the year, although the deal is still awaiting regulatory approval.

A good report could boost Yahoo shares, which have been up over the year about 38 percent.

The stock still lags those of other Internet companies, as well as the overall market. In the same period, the Nasdaq was up about 44 percent, Google (GOOG) stock has doubled and Microsoft shares are up a lot more.

Still, some analysts are expecting Yahoo shares to rise to above $20 from its current price, which has been hovering at about $15 to $16 a share.