When Time Warner reports its second-quarter earnings tomorrow morning, before the markets open, most Wall Street analysts are not expecting much from the media giant, as it continues to slog toward a rejiggering of itself.

Time Warner (TWX)–which owns assets like the Warner Bros. movie studio, the AOL online unit, the HBO and Turner cable television networks and Time Inc. magazines–is expected to earn 37 cents per share, compared to 72 cents a year ago, according to a poll of analysts from Thomson Reuters (TRIN).

Revenue is expected to be $6.97 billion, down from $11.56 billion in the same quarter last year. This drop is mostly due to the March spinoff of its cable unit, Time Warner Cable.

With movies like “The Hangover” and the sixth in the series, “Harry Potter and the Half-Blood Prince,” doing well, there is some strength at Time Warner.

But the advertising market has been weak all over, which hits the company hard.

That’s why both AOL and the magazines are expected to keep up their drag on Time Warner’s financial prospects–at least until the November spinoff of the online unit.

Until then, most expect another miserable quarter from AOL advertising revenue. Sources noted that any turnaround won’t show till end of year at the earliest, due to the weak economy and a retooling of the company and its sales force.

That restructuring is not over, most agree, with expectations of more layoffs of some of its 7,000 employees coming. With the 100-day overview by new CEO Tim Armstrong now over, sources said, the staff size is likely to be adjusted accordingly.

Most also expect to see continued weakness at the long-suffering Time Inc. magazine division.

People outside the company think that Time Warner CEO Jeff Bewkes will want to sell or spin off Time Inc. once AOL is done.

And people inside the company talk about the fact that Time has some 125 titles, although most of the revenue and profit only come from a few titles, such as People, Sports Illustrated and Time.

According to sources at the magazine division, talk of a new round of layoffs has also been also circulating there of late.

[The t-shirt image courtesy of Zazzle.]

How low can Microsoft go?

Very low, it seems, in announcing really bad fourth-quarter earnings, missing Wall Street revenue estimates by an astonishing $1 billion.

Talk about a game of extreme limbo.

After the market close Thursday, the Redmond, Wash.-based tech giant reported that fiscal fourth-quarter net income fell to $3.05 billion, or 34 cents a share, from $4.3 billion, or 46 cents a share, in the same period a year earlier.

Revenue for the period ended in June fell 17 percent to $13.1 billion. Wall Street had been looking for earnings of 36 cents a share on $14.37 billion in revenue, according to data compiled by Thomson Reuters.

Online advertising revenue took a big hit, decreasing $86 million or 14 percent, to $529 million, as the display advertising business got hard hit.

No surprise–Microsoft (MSFT) shares have been taking a beating in after-hours trading.

BoomTown liveblogged the earnings call.

2:32 pm PDT: The conference was kicked off and Microsoft CFO Chris Liddell–whose jaunty New Zealand accent I never tire of–came on right away, pointing out the very obvious bad news in several different ways, although also trying to find some kind of silver lining.

The quarter, he said, “marks the end of one of the most difficult [periods], but also most encouraging.”

The darkness has a dawn, he noted: “In my mind, we are a stronger company than we were a year ago…but we need to lift our game to a new level in 2010.”

You can say that again!

So Liddell did, saying that “there are some signs that we have at least seen the worst” of the econalypse, and “looking forward, we do not expect trading conditions to get worse.”

Well, how could they?

2:35 pm PDT: Microsoft’s investor relations guy went over the numbers. Crappy results, but meaningful cost savings.

Read the official press release here.

2:48 pm PDT: Liddell came back on and he said this would be one of the most “interesting” years, especially due to a spate of new product rollouts coming, such as Windows 7.

He did some forward-looking, talking about a variety of arenas at Microsoft, from the games business to its product launches to tax rates.

Microsoft has, despite the economic turmoil, a great balance sheet in terms of cash–with over $30 billion.

I think I found a gold lining.

2:56 pm PDT: Question-and-answer time.

The first was about spending on personal computers, which hit Microsoft badly on the downside, said Liddell.

But, as a refresh cycle kicks in, he noted that average selling prices will go up.

It would eventually get “better,” which Liddell pronounced, bitter.

Irony alert!

The next question was about margins. Microsoft has tried to cut costs, said Liddell, although it would never completely offset the bad economic conditions. And he was not making promises.

A follow-up on buying back more Microsoft stock. Nope, because “we’re still not sure we’re out of the woods.”

The next question was about what customers are saying about the Windows 7 upgrade and about server shipments.

No surprise, but server shipments are weak. “We don’t see a lot of pent-up demand in that area,” said Liddell.

As to PCs and Windows 7, he said he has more hopes of people being more likely to start to move over. Or, at least, prepare to do so.

“Then, you start to get into a much more virtuous cycle,” said Liddell.

A question on whether expenses can be slowed more.

Sorry, analysts! Nope.

Another question on looking at PC-refreshing. We’ll see, said Liddell.

Another expense question. Hey, analysts, you might want to stop asking since Liddell is not going to suddenly say Microsoft is lopping off more employees–at least, not right now!

Plus, there are those pricey upcoming product launches, said Liddell, which is going to take some dollars.

“There are a series of relatively small items, which add up,” he said.

3:09 pm PDT: An annuity question. Zzzzzzzzz.

Analysts continued to try to get Liddell to predict when things were going to take off again and return to the golden times when Microsoft was a regular financial powerhouse.

It was admirable that he refused to take the bait and maintained his tone of semi-doom and lessening-gloom.

“I would not promise that it is going to be significantly better,” said Liddell.

3:18 pm PDT: A question about the latest launch of Office in 2010 and its impact on financials.

Liddell said he did not see a significant impact until 2011.

The next question was also one on revenue: “Is revenue going to grow?” asked one analyst in a kind of desperate-sounding way.

Liddell said Microsoft would be watching costs, which would help. As to revenue, which is less controllable, he could not say.

3:22 pm PDT: Although there have been no queries about Microsoft’s discussions with Yahoo (YHOO) about a search and online advertising partnership–which will cost the company a pretty penny, if struck–there was a question about Google (GOOG) and its Chrome operating system.

“We still believe that people will want a client and an Internet-based experience,” said Liddell.

Translation: Google is a mouse that roared!

The final question was about how various geographies are doing. Asia and emerging markets are a place for growth, said Liddell, followed by North America, especially relative to Europe and Japan.

But, the tone of the earnings call? Economically speaking, it’s still a small world after all.

Yahoo and Microsoft are still seriously talking about a search and partnership deal, never-ending discussions that might or might not come to fruition. But most investors will be focused on real results this week, as both tech giants report quarterly earnings.

But, after a ho-hum performance last week from Google (GOOG), Wall Street is not expecting much from either, as the econalypse continues to take its toll on financial performance.

Yahoo (YHOO) will report its second-quarter earnings at 2 pm PDT tomorrow, while Microsoft (MSFT) will report on Thursday at 2:30 pm PDT.

The last quarter was weak for Yahoo, due to the depressed online advertising market, which is its biggest business.

And Wall Street is expecting more of the same, although perhaps with some signs of recovery and improvement after major cost cuts at the Silicon Valley icon by CEO Carol Bartz.

According to a round-up averaged by Thomson Reuters (TRIN), analysts think Yahoo will have revenue of $1.14 billion and earnings of eight cents a share, not including special charges due to recent layoffs and taking out commissions paid to advertising partners.

A search deal, if struck, could have a dulcet impact on Yahoo’s stock, which has been up strongly in the quarter.

And the industry is also hoping for some bump from the introduction of Yahoo’s redesign of its front page, code-named Metro, which it has been testing for a dog’s age now and will debut soon.

Shares of Microsoft have also been doing well recently, although it is not expected that any search deal will have much impact on its stock or, really, its actual business.

Search is a very small part of Microsoft’s portfolio, despite all the focus on its innovative new Bing search service. Instead, as always, the Redmond, Wash.-based company is squarely dependent on the performance of its dominant software products, Windows and Office.

Last quarter, Microsoft CFO Chris Liddell was very grumpy about the economic outlook and it is likely to be a repeat performance on Thursday, albeit with some encouraging signs of the lessening of the decline.

Still, analysts expect Microsoft to get hit from the continued weak sales of personal computers, which are chock full of its software.

On average, according to Thomson Reuters, analysts think Microsoft will have revenue of $14.38 billion in its fourth quarter, earning 36 cents a share. That’s off just over 10 cents in earnings from last year’s 48 cents per share.

But–as many readers have requested–they will all be available in their entirety in this column.

Here’s Part 3 of 3 of an interview I did with Thomson Reuters CEO Tom Glocer.

(I posted one video part of the discussion with Glocer every day this week starting Monday and concluding today.)

Thomson Reuters was created by a merger in April that created one of the world’s biggest information companies, mostly aimed at businesses and professionals.

In this video, Glocer talks about how to avoid the fate of the music industry, the troubled economy, his favorite gadgets, new ways to deliver information on a variety of devices, and also takes questions from the audience about machine-trading and possible new acquisitions.

But–as many readers have requested–they will all be available in their entirety in this column.

Here’s Part 2 of 3 of an interview I did with Thomson Reuters CEO Tom Glocer.

(I will post one video part of the discussion with Glocer once a day this week, starting yesterday and concluding tomorrow.)

Thomson Reuters was created by a merger in April that created one of the world’s biggest information companies, mostly aimed at businesses and professionals.

In this video, Glocer talks about the merger of Thomson and Reuters, how to benefit as the newspaper business struggles, how news will be delivered in the online future and what scares him, digitally-speaking.

But–as many readers have requested–they will all be available in their entirety in this column.

Here’s Part 1 of 3 of an interview I did with Thomson Reuters CEO Tom Glocer.

(I will post one video part of the discussion with Glocer once a day this week, starting today and concluding Wednesday.)

Thomson Reuters was created by a merger in April that created one of the world’s biggest information companies, mostly aimed at businesses and professionals.

In this video, Glocer talks about his geeky background and about making a business selling news and information distribution in the digital age by having the deepest, most reliable and most comprehensive data–able to be consumed by both humans and machines.

While Microsoft’s (MSFT) CEO Steve Ballmer and Yahoo’s (YHOO) CEO Jerry Yang hemmed and hawed about what had happened in their disastrous takeover battle that ended not with a bang, but a whimper, everyone else who appeared onstage at the sixth D: All Things Digital conference last week was a bit more definitive about what should occur now:

Get it done.

From Thomson Reuters’ (TRI) Tom Glocer to IAC’s (IACI) Barry Diller to TiVo’s (TIVO) Tom Rogers to Rupert Murdoch of News Corp. (NWS) (who simply said: “I’d get on with it.”), it seemed obvious to one and all that the only way either had a prayer of catching up with online search leader Google (GOOG) was to join forces.

It seems, according to many sources, that the pair are now in serious talks again, which–if they are smart–will come to some resolution, yes or no, within the next week. (You’ll get first wind of what’s what, as soon as much-frustrated bankers begin their leaking to major news outlets.)

Whatever the case, I dearly hope these discussions are not bogged down as they have been before.

Not in the bits and pieces niggling of some complex partial deal to buy search and spin of this and that here and there in a configuration sure to confuse everyone.

And not continuing with the endless roundelay of price negotiations that seems to have needlessly taken focus off the ball–which is to create a competitive alternative to the incessant brainiacs of Google (and if you want any more proof of that, see this New York Times piece today about the search giant’s data-crunching abilities).

It seems $33 to $34 a share will still wrap the whole thing up and, if Microsoft was serious about its intentions to buy Yahoo when it first made its foray in February, that seems doable.

Because, if Ballmer is serious about his contention, which he made fervently onstage at D6, that the software giant keeps “coming and coming and coming,” it simply cannot make that attack from a piddling 9% market share in the online search business.

One of the most interesting takeaways I had from last week’s interview Walt Mossberg and I did with him and Chairman Bill Gates (who seemed about as underwhelmed by a Yahoo deal as possible without slumping over asleep) was the early focus at the company on fiscal conservatism.

Baked into its DNA, as it turns out, is a fear of bankruptcy even.

While that was funny to hear about–complete with worried financial calculations on sheets of yellow paper stuffed in couches early on–it seems to continue to this day, despite Microsoft’s huge treasure chest of cash.

But Ballmer should slough off that tendency, as Microsoft can afford all of Yahoo and it should if it wants to make the boldest case possible that it will compete with Google.

As for Yahoo, both Yang and President Sue Decker are to be lauded for showing up to answer Walt’s questions (and one by me via remote video about leadership, which neither actually did answer) about the company and its future.

Their sincerity and love of Yahoo and its products and people was clear and even touching, making it clear that companies are a true reflection of its leaders.

But, while making good points about the he-said-she-said nature of the past Microsoft talks, the pair still could not adequately and passionately explain what Yahoo is exactly, which everyone I spoke to in the halls was surprised and even disappointed by.

Moreover, their weariness for the next phase of tumult that will come if Yahoo remains independent was apparent in both their body language and low energy levels, especially when compared to others onstage like Murdoch, Amazon’s Jeff Bezos and, of course, the frenetic Ballmer.

Yang and Decker need big-time help and they need it now, help that cannot come from their own dwindling energies and that of their much-beleaguered troops.

Still, they also deserve credit for this very funny spoof video of advice they have been getting.

I especially like the turn by famed investor Warren Buffett best, with his “buy low, sell high” tip.

But I would fiddle with that to change it a little bit for Yahoo today: Just sell high enough.

Here’s the Yahoo spoof video:

The annual gathering of tech and media luminaries was created and is run by my partner Walt Mossberg and me.

D6 tech and media speakers include: Microsoft Bill Gates and Steve Ballmer of Microsoft (MSFT); News Corp.’s (NWS) Rupert Murdoch; Jeff Bewkes of Time Warner (TWX); Mark Zuckerberg and Sheryl Sandberg of Facebook; Michael Dell of Dell Computer (DELL); IAC’s (IACI) Barry Diller; Amazon’s (AMZN) Jeff Bezos; Howard Stringer of Sony (SNE); and TiVo’s (TIVO) Tom Rogers.

Also: Tom Glocer of Thomson Reuters (TRI); Melinda Gates of the Gates Foundation; FCC Chairman Kevin Martin; Lowell McAdam of Verizon Wireless (VZ); Activision’s (ATVI) Robert Kotick; and former Microsoft tech guru Nathan Myhrvold of Intellectual Ventures.

Just recently, we added Jerry Yang, CEO and co-founder of Yahoo (YHOO), and now he is being joined onstage at the conference by Yahoo President Sue Decker (pictured here in a lovely Wall Street Journal dot-drawing).

The pairing should make for a lively session, given all the heat around Yahoo of late, largely related to the scuttled attempt by Microsoft to buy the company.

What would you like to know about that and anything else about Yahoo?

As it so happens, you can ask!

While the conference is sold out, you can submit questions that you would like answered to Yang and Decker or any of the speakers via text or video. Walt and I will pick the best ones and let loose.

Ask early and often here!

In addition, the whole conference will be online at AllThingsD during the conference, via live blogs and reports of breaking news (and there will be breaking news, as there always is), along with video highlights.

And videos of all the interviews will be posted soon after it is over.