Microsoft reports earnings for the fiscal 2008 fourth quarter and full year Thursday. It will also sharpen its forecast for the current quarter and fiscal year against a backdrop of grim developments in the broader economy.

At the same time, the ongoing pursuit of Yahoo could be coming to a climax in two weeks at Yahoo's shareholder meeting. But the drama that has unfolded in the last five and a half months has put an anchor on Microsoft's stock and called the company's online strategy into question.

So what are analysts expecting and watching for Thursday?

LOS ANGELES -- I got an email yesterday from Bill Dugan of Torpex Games, a collection of video game industry vets who are bootstrapping it in the growing downloadable games market. He had good news: Their game, Schizoid, shipped last week.

As I head home from the E3 Media and Business Summit, Dugan's success was a reminder that the games industry is not all about the blockbuster titles and multi-million dollar marketing extravaganzas like this one.

Brier Dudley points out in his blog today that Xbox boss Don Mattrick told a blogger from MTV's Multiplayer blog that a new version of "Halo," the blockbuster game, is in the works.

Mattrick's remarks came after Bungie Studios, the Kirkland-based developer of the series, canceled an announcement many expected Tuesday at E3.

The Wall Street Journal is reporting that Time Warner and Microsoft are talking more seriously about a possible deal.

LOS ANGELES -- One feature of our revamped Microsoft Pri0 blog is video. Check out this tour of "Into the Pixel: An Exhibition of the Art of the Video Game" here at E3. Some of the images are beautiful, and very interesting. I think it gives a sense for how the games industry has matured and is a full-fledged, vibrant art form. Feel free to share your thoughts in the comments below.