Despite some breathless pronouncements that Yahoo’s earnings report will be a watershed moment in the company’s long history, I would strongly suggest that Yahoo’s earnings are unlikely to have much if any impact on the fate of the company – a fate that is very likely squarely in the hands of Microsoft.

Obviously if the Q1 earnings come in way above the modest analyst expectations it is possible that Yahoo will escape a Microsoft merger by “earning” in the eyes of the market a much higher valuation. However the most likely scenario has Yahoo coming in with earnings that are in line with or only modestly above analyst expectations. Given how hard Yahoo is now working to improve the company’s prospects and fend off a Microsoft takeover even a modest improvement is unlikely to be viewed all that favorably by investors. A few dollar increase in the share price might up Microsoft’s bid for Yahoo, but it is unlikely to change the game much.

Assuming today’s after close earnings are pretty much in line with analyst expectations of about .09 per share you can expect Microsoft to proceed with a proxy fight to takeover Yahoo, and you can expect Microsoft to win this battle. Investors – apparently even some major investors on the Yahoo board – have tired of Yahoo’s failure to capitalize on their many strengths to challenge Google’s online dominance.

Barring spectacular YHOO Q1 earnings, the fat lady sings today, and she’s singing a Microsoft tune.

Disclosure: Long on YHOO