After an unusually long reading of the perfunctory warnings, CEO Jerry Yang is trumpeting the just-released results as “all the more remarkable given the recent economic environment and the uncertainties from Microsoft’s (NSDQ: MSFT) proposal.”

-- Microsoft: “Microsoft’s proposal substantially undervalues Yahoo...the board’s decision to reject was based on the strength of our business.” But, they’re still open to the right deal: “Since then, our board and management team has been open to any and all alternatives, including a sale to Microsoft.” Lots more after the jump…

-- Advertising: Display revs were up over 25 percent in the quarter.

-- Search: Closing gap in search relevance with Google (NSDQ: GOOG). Panama will help that gap narrow further.

-- Econ outlook: “While the overall economic outlook remains unclear, and we’re not immune… we have a very diverse advertising base, and believe ad budgets will continue to move online.” And, as others believe, targeted advertising will do well in a recession.

Sue Decker picks up the baton, talking tactics. This is the equivalent of when Larry and Sergey talk on the Google call, as she’s mainly touting specific product improvements (not the kind of stuff analysts or investors are dying to hear about). Examples: OneSearch, openness, video on Flickr, Panama gains. RPS was up about 10 percent.

Google Outsourcing: Decker says company sees tremendous value in being a significant player in search and display. ”It’s premature to speculate on what options we may ultimately pursue.” (Note: this is not what analysts want to hear—they want numbers.)

After a rundown of the numbers from Blake Jorgensen, the Q&A begins…

- Asian assets: Yang: “Not going to be able to talk too much about different alternatives… suffice to say that as we think about strategic value in transactions, we certainly think that the positions we have in China and Japan are second to none.” Company is thinking about ways to provide more transparency into what’s going on with those assets.

-- International: Moving off of low-quality affiliates. Seeing strong growth in display.

-- Microsoft disruption: Yang: “We are watching the economy more than the Microsoft uncertainty… hard to say if any impact from Microsoft at all.”

And the call is over… not, in the end, much talk of Microsoft or Google. And now the onus is probably on Microsoft to make its move. It reports its own earnings on Thursday, though hard to see anything big hinging on that.

Ultimately, you have to have to try the experiment mentioned in the previous post: In a parallel universe, sans-bid from Microsoft, do these numbers convince investors that Yahoo (NSDQ: YHOO) is worth more than $31 per share, or even close to that? Almost certainly not. 

• Earnings: Yahoo Q1 Edges Past Analyst Estimates; Outlook Up; No Google Data