IRS Decision Could Overshadow Yahoo's Q2 Results

Investors might be too distracted to care how

performed during the second quarter. "It's always tough to get a good read on Yahoo because there's so many changes," B. Riley & Co. analyst Sameet Sinha told Benzinga. "Ultimately it comes down to [whether] the focus is going to be on the IRS decision and the spinoff, whether [there is] gonna be a tax fee." Sinha is referring to Yahoo's

for a tax-free spinoff of the company's remaining stake in

. Those plans were believed to be in danger when

reported that the IRS could make changes to the way spinoffs are handled. Some analysts fear that the IRS

Yahoo's plans. "I think ultimately that's what it's going to come down to," said Sinha. "I'm not expecting anything great out of this quarter."

, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga that Yahoo has one notable problem. "It's really just about how Alibaba is gonna trade (which we can see everyday now) and what's going to be the tax treatment," said Udall. "Does Yahoo get that deal? They should. They made the deal, they should be grandfathered in. The US government shouldn't be able to retroactively change the tax code. They should be okay, the tax-free spin should work. But we don't know that and that's the thing that has messed up the stock price." Yahoo will report its second quarter results on Tuesday, July 21 after the market close. Udall said he wouldn't be surprised if the firm had "solid" results. "But solid just means they have minimal growth, like they usually have," he said. "Cash flow is okay. Really the whole story of Yahoo on the stock price is, 'When do they finally spinout Alibaba and what is the tax treatment of that?'" Udall also wants to know what Yahoo will do with all that money. He said the company overpaid for a number of startups, many of which didn't work out. "I think Tumblr is cool but I don't know if it's making them any money or growing revenue very much," Udall added. "They paid a lot of money for Summly [and] I don't know if Summly is even working anymore. They need to prove they can do really solid, smart M&A when they get that money from the Alibaba spin." Disclosure: