Exactly who should be buying whom? With only minimal mention of Microsoft from both Yahoo executives and analysts this afternoon, suddenly the "big deal" between the software giant and the portal keeper doesn't seem to be "on."

It is one of the biggest uphill battles in the technology industry, and last quarter, it seems "uphill" is the only direction Yahoo knows: Revenues up 9% on the year to nearly $1.82 billion, and gross profit up 11% annually to $1.06 billion versus Q1 2007. Operating income was down 28%, though actually that percentage can fool you: Last year's operating income at this time was low to start with, so the reduction is only $48 million. And the shock of the day, if there was one, is that this reduction was much less than expected.

"Our diverse base of advertisers and industries has produced good overall growth, and helps to offset cyclical weakness in different sectors," announced CFO Blake Jorgenson at one point. "The Internet has evolved into a mainstream advertising vehicle since the last recession, and industry dynamics are much different now. Advertisers' budgets may fall, but we believe the compelling ROI of online ads compared to other media may cushion the impact on our industry."

The strategy spelled out by Yahoo President Susan Decker this afternoon may be gaining traction -- or more accurately, the "gaining" part may have been three months ago, and the traction could be turning into acceleration. Yahoo remains the Web's principal destination, and the company's strategy is now based around accentuating the value of that destination while distinguishing the functionality of its search capabilities against Google's.

To that end, Decker said, expect to see some major new functionality rollouts in the coming months, including opening up the search API to outside input.

"Our next major advance is open search," she told analysts, "which we call 'Search Monkey.' Later in Q2, we will open the search user interface to developers and give them the opportunity to innovate right on top of our search technology. As a result, users will soon enjoy search results as rich and dynamic as businesses and the community of developers can make them."

Perhaps at around the same time, expect to see personalization features added to Yahoo's home page, similar in concept to iGoogle, and likely with an open, XML-based API as well.

There was only one allusion this afternoon to Yahoo's utilization of Google's tools -- or maybe more than just its tools -- and Decker was very pointed with her language here. Referring to Yahoo playing catch-up with Google in the search space, she said, "We've narrowed the search monetization gap, and plan to continue closing it. There may be more than one way to achieve that goal, so we're exploring options to enhance our monetization, including a test with Google, which we recently announced.

"It's premature to speculate on what options we may ultimately pursue," she continued, "or whether some form of arrangement with Google might result. But the goal remains the same: to be a significant player in search, and optimize near-term monetization as one important way to create stockholder value."

That term "stockholder value" came up just one other time -- earlier, during CEO Jerry Yang's comments, with respect to its options with Microsoft.

"Our board and management team continue to be open to any and all alternatives, including a sale to Microsoft," Yang told analysts. "We engaged with major stockholders to highlight the value of our unique assets, and have been expeditiously exploring a number of strategic alternatives which we believe will help us achieve our over-arching goal of maximizing stockholder value."

There's a cost to that exploration effort, which is not only measured but had a negative impact: $14 million, applied in the last quarter against costs.

Maybe because of the Microsoft bid, maybe because hard work can give one a certain economy of words he's never appreciated before, the tone and the approach of Yahoo this quarter were a polar opposite of the metaphor-laden, adrenaline-pumped, almost sickeningly sweet approach the company's new leaders donned last summer, as they were searching for chicken-soup-for-the-bottom-line to soothe investors' spirits. Nothing beats real growth for that job, not even the best metaphor Jerry Yang can concoct. There is a notable absence of peanut butter at Yahoo today.