Will Yahoo’s revenue growth drought finally end this quarter?

We’ll see tomorrow when Yahoo reports its first-quarter earnings, after the markets close.

As usual, investors will be looking for some sign that the Silicon Valley Internet giant’s lackluster revenue results have improved in CEO Carol Bartz’s over-promised but still under-delivered turnaround effort.

And despite Wall Street worries that sales will remain flat, sources insist that display revenue will be slightly better than expected, although those from its declining search business will remain weak.

A poll of analysts is expecting Yahoo to report $1.05 billion in net revenue and earnings of 16 cents a share.

That compared to revenue of $1.13 billion and 22 cents in earnings in the same period a year ago, which was goosed by the sale of its Zimbra email asset to VMware, as well as some benefits from its search and online advertising partnership with Microsoft.

There’s no extra cherries on top this quarter, especially in the search arena, which BoomTown previously reported was troubled.

As I wrote last week:

In fact, although its display business will show a definite strong recovery in Yahoo’s quarterly results next week, its search business–both in market share and revenue per search (RPS)–has, as one person close to the situation put it succintly, “fallen off the cliff.”

That’s due, in part, to getting the new system with Microsoft delivering better results, which is not happening yet (if ever!).

In this quarter, Microsoft has honored its contractual guarantees and will make up the difference–which will result in masking the magnitude of the RPS loss. It’s a worrisome trend to watch.

In the last quarterly call, Bartz had warned that MicroHoo had not grown yet into the beautiful swan expected in this ugly-searchling tale, noting that it might take until the second half of 2011 to see some prettier results.

Thus, Yahoo will turn Wall Street’s greedy eyes to display, an arena it dominates still, despite increasingly successful incursions from Google and Facebook.

A win here is key, of course, with investors hoping for a strong performance.

Yahoo’s stock certainly is not doing that, holding fast to its share price in between $16 and $17 for a while now. A year ago, the stock was above $18 a share.

As Citi Investment Research’s Mark Mahaney noted in an earnings preview today:

Valuation remains interesting, with a highly attractive Asian Internet investment portfolio. In terms of risks, we focus on: 1) Competition in the Display Ad segment from Google, Facebook, etc; 2) YHOO’s overall Internet Usage Share Loss–now less than 10% of U.S. ’Net usage minutes; 3) YHOO doesn’t have assets in place to take advantage of trends in Social, Mobile & Local Internet, and Video Advertising; & 4) We are challenged to identify a near-term positive catalyst.

“Challenged” translates to Mahaney saying politely that Yahoo has zip coming down the pike to change its situation.

That means Wall Street is not yet in the mood to give Yahoo shares a break. Here is one of BoomTown’s fave videos–the great Diana Ross, with the infectious song hit, “I’m Coming Out”–to get the right vibe going:

Maybe it would be easier to sell Facebook to Microsoft for billions and billions, even though it is not likely you will.

But, for the sake of argument, let’s take the opposing position about the best future for the hot social-networking site.

In other words, make a friendly Microsoft takeover of Facebook your own version of an IPO, as John Furrier has suggested here, and walk away a Silicon Valley legend.

Because such a sale to Microsoft could happen, you know, with or even without you.

Here’s one scenario to think about while on your current worldwide “Vision Quest” trip:

Microsoft (MSFT) somehow screws up its courage again after the Yahoo (YHOO) rejection and makes a concrete offer anywhere above $10 billion for Facebook. And it gets on the record, as it must, at your next board meeting.

Say you refuse, as you have the power to do (and have done before) as founder, due to the voting structure.

But minority shareholders find out (they always do), then some employees and, inevitably, the press.

Mayhem will surely ensue.

Sure, they all stuck with you when you turned down previous offers for Facebook at more than $1 billion from Yahoo, $5 billion from Microsoft, sniffs in that range from Google (GOOG).

That was definitely gutsy for you to do, in your first job and in your early 20s.

But $10 billion, when you have not yet proven you have a truly sustainable and explosive business model of the kind Google luckily found before its IPO?

And what if the Microsoft offer was $15 billion? $20 billion?

BoomTown will tell you exactly what:

Possible lawsuits–ask any good corporate governance lawyer about it–from any number of aggrieved minority investors for not grabbing the Willy Wonka-esque golden ticket when it was offered to you.

Growing pressure from the media–which you are, to be certain, very good at completely ignoring–asking incessantly whether you have just made too big a bet this time.

And, most importantly, from your own employees, the growing worry that even you, especially in a weak economy, cannot spin up a shinier IPO than the money Microsoft is offering you. Stayers can turn into sellers very quickly.

You need to be prepared, BoomTown speculates, for this very possibility and need to have answers when and if the time comes.

That requires asking some questions, which I am guessing a smart young man like you is already asking of yourself.

Such as: At what price should I consider a Microsoft buyout? Could Facebook still be run independently? And, if not, how long would I have to stay at a Microsoft-owned Facebook?

Most importantly, how many other entrepreneurs like me have refused the big buyout and done better?

(The list is long and varied–some like Google’s Larry Page and Sergey Brin refused and won, but others like former Netscaper Marc Andreessen did not and also did just fine.)

You’re lucky for now, of course, because Microsoft’s CEO Steve Ballmer will likely not make a definitive offer after the Yahoo debacle, without knowing you are firmly on board to at least consider it with a friendly frame of mind.

And, I am guessing, you won’t dangle a price to Microsoft either.

Thus, a chicken and an egg conundrum. Which comes first?

BoomTown is also guessing the bankers are working hard at solving this ancient philosophical causality dilemma–in this case, who can and should move first?

But no matter how much they huff and puff–expensively, of course–the only one who can solve this puzzle is you, at least at this juncture.

And that requires just one basic question for which you need to have an answer ready: Do you truly believe you can do better?

Well, do you?

Furrier thinks not: “Risk losing it all in competitive warfare where you’re undermatched and overgunned. … It’s about basic risk management.”

Of course, all BoomTown can offer to say is this: There is absolutely nothing basic about it.

And, for your viewing pleasure, there is also nothing basic about this delightful man lip-synching to the classic movie “Willy Wonka & the Chocolate Factory” ditty, “I’ve Got a Golden Ticket” (along with the real clip from movie below it):