As Yahoo prepares to report its second-quarter earnings after the bell on Tuesday, once again the company won't really be at the center of its own story.
With the stock down more than 20 percent this year and a majority of analysts expecting a sharp decline in earnings, much of Wall Street will be watching to see how the company plans to spin off its $30 billion stake in Alibaba, which accounts for roughly three-fourths of Yahoo's market capitalization.
The details matter here. When Yahoo first sold half of its Alibaba stake back to that company in 2012—for a pretax gain of $7.6 billion—it got hit with a $2 billion tax bill, a mistake the company does not want to repeat.
Read More Ignore Microsoft earnings and buy the stock, analysts say
"The variability in valuation of the spin is 40 percent of a $30 billion-plus asset, so it's a really big deal," said Rob Sanderson, managing director at MKM Partners, who has a $58 price target on Yahoo—roughly $12 higher than it's trading now.
"In terms of listing where the stock goes, there's nothing bigger than that," he said.
Sanderson's upside confidence is not universally shared. In a note last week from Pivotal Research, analyst Brian Wieser cut Yahoo's target price to $42 from $49 citing a "slightly higher risk" surrounding Yahoo's spinoff plans.
Read MoreCramer: Don't abandon finance & tech stocks, yet
Despite discussions from the IRS over changing tax rules for asset-rich companies, Yahoo expects the Alibaba transaction to be completed in the fourth quarter after the expiration of its lock-up agreement. The company has yet to say what it plans to do with the money.
Even with all the Alibaba talk, investors won't neglect Yahoo's core business of display and search advertising, which have disappointed as of late. Last quarter search-ad revenues declined for the first time during Marissa Mayer's tenure as CEO.
BGC analyst Colin Gillis also dropped his price target and is not confident Yahoo can turn these key divisions around, expecting a 2 percent year-over-year growth rate in search revenues and growth rate of 0.5 percent for display-ad revenues.
Despite the growth in search revenue, "display is going to be tougher to turn around," Gillis said. "Prices have been dropping as they put more ads out there. Let's see if they can be maintained."
Yahoo expects revenues outside traffic acquisition costs to be in the range of $1.01 billion to $1.05 billion. The company also expects to post adjusted earnings before interest, taxes, depreciation and amortization in the range of $240 million to $260 million, and non-GAAP operating income in the range of $90 million to $110 million.
Analysts expect the company's quarterly earnings to come in 51 percent below last year's mark at 18 cents per share on revenue of $1.03 billion, according to a consensus estimate from Thomson Reuters.
And after Google impressed investors last week with its first earnings beat in six quarters, sending shares soaring some 16 percent, the pressure on Yahoo to deliver is only made that much greater.
Read More Why Google will score more earnings beats: Analyst