SAN FRANCISCO — The corporate drama that has weighed heavily on Yahoo Inc.'s managers also cut into the Internet giant's second-quarter earnings report Tuesday. Investors were braced for worse.
Profit declined again in the second quarter and missed Wall Street's lowered expectations. Yahoo attributed the shortfall to increased spending on new projects and fees to advisors in its takeover battle with Microsoft Corp. and proxy fight with dissident shareholder Carl Icahn.
"It was a disappointment," Sanford C. Bernstein analyst Jeffrey Lindsay said. "But people were fearing a disaster."
Yahoo shares rose 59 cents, or 2.8%, to $21.99 in extended trading after slipping 27 cents, or 1.2%, to $21.40 in the regular session.
Chief Financial Officer Blake Jorgensen called the economic environment difficult, echoing suggestions of a slowdown in online advertising in earnings reports from Google Inc. and other Internet companies last week.
But doubts about the company's future were eased somewhat when Yahoo management maintained its revenue outlook for the rest of 2008. Yahoo narrowed the range of its forecast to between $7.35 billion and $7.8 billion.
Yahoo said it would pursue its search advertising partnership with Google in September if the deal receives regulatory approval. And management did not rule out selling stakes in its Asian assets or pursuing acquisitions. Chief Executive Jerry Yang told analysts that Yahoo had been exploring "every alternative possible" including financial transactions to boost shareholder value.
None of the initiatives will deliver to shareholders the short-term payout of Microsoft Corp.'s abandoned $47.5-billion takeover offer.
Under increasing pressure to revive growth at Yahoo, Yang bought himself breathing room Monday when he negotiated a cease-fire with Icahn.
But Yahoo is unlikely to catch much of a break from investors at its Aug. 1 annual meeting. The company's continuing lackluster performance irks investors frustrated by the stock price that has languished since Yahoo rejected Microsoft's offer.
Yang said he was pleased with Yahoo's performance in light of the ongoing turmoil. "The indicators on Yahoo's progress are promising," he told analysts.
The Sunnyvale, Calif., company reported earnings of $131 million, or 9 cents a share, in the quarter, down nearly 19% from $161 million, or 11 cents a share, a year earlier. Analysts had estimated earnings of 11 cents a share, according to Thomson Financial.
