Next Yahoo Challenge: Earnings Triumph or Waterloo?

While a lot of investor focus has been on the executive turmoil at Yahoo recently, the real attention will soon be turning on its third-quarter earnings report two weeks from now.

That’s on October 19, with a conference call after the markets close, an event that big Yahoo (YHOO) investors are telling BoomTown will be under a great deal of scrutiny.

Not just to assess the numbers and their direction, but to listen to the kind of explanation CEO Carol Bartz will give Wall Street for all the management upheaval.

Will she discount it–as she has cavalierly before–as meaningless, despite the fact that a big chunk of its media and sales leadership has bolted to much greener pastures?

Also of interest, according to several major Yahoo investors I have spoken to in recent days:

What’s the plan going forward to spur serious growth?

What will differentiate Yahoo’s business from rivals?

What more is on the road map presented by Chief Product Officer Blake Irving at a recent Yahoo event?

Of course, most of all, Bartz will be pressed on the results themselves, especially if revenues remain as flat as last quarter’s.

The kicking-in search and online advertising partnership with Microsoft (MSFT) should provide some relief on the cost side in the quarters ahead, for improved earnings, although Wall Street is looking for signs of significant innovation and product growth to give the stock some lift.

Also, in the shadows, is the stability of the tenure of Bartz, whose contract with Yahoo runs out in 18 months, as well as swirl about various takeover and acquisition scenarios.

According to numerous sources, with increasing outside pressure to act, several members of the board are beginning to contemplate a replacement for Bartz, although none has acted.

Said one person close to the situation: “There is no one powerful board member, leaving each director feeling isolated, so it’s stasis.”

I don’t expect them to move much either, given just how asleep at the wheel Yahoo’s directors have been over the last several years in the wake of even more pronounced crises.

“They’re frozen,” said one frustrated investor who has been in touch with Yahoo board members recently. “And they don’t want to make any admission of failure, since they have barely skated away from past mistakes.”

Those are certainly harsh words, but they are common and increasing among investors who are now clearly riveted again on the tribulations of the Silicon Valley icon.

Whether the company can turn that around sooner than later–we’re all waiting to see the earnings shoe to drop to find out.