Yahoo! claims 'strong' Q2

Yahoo!'s earnings for its second quarter came in one cent lower than expectations, with net income declining 19 per cent, but the company called the quarter "strong".

Using generally accepted accounting principles, the company's net income decreased 19 per cent from $161m in the year-earlier quarter to $131m. But excluding various charges, the internet pioneer reported profits of 10 cents per share, less than the 11 cents per share that analysts surveyed by Thomson Reuters expected.

Revenue increased eight per cent to $1.35bn, excluding commissions called traffic acquisition costs that are paid to advertising partners. Analysts had expected $1.37bn.

CEO Jerry Yang remains optimistic about his company's fortunes.

Yang said in a statement accompanying the financial results: "Yahoo! saw benefits in the second quarter from a number of the strategic initiatives that we have been delivering against, including the roll out of innovations in search and the announcement of a number of important partnerships.

"We are seeing validation that we have the right strategy as we continue to make transformational investments that position us to take advantage of pivotal trends driving growth on the internet."

The company is in the midst of changes: a slowing economy, nearly half a year spent fending off Microsoft's attempt to acquire Yahoo!, a deal under which top rival Google will supply search ads and as much as $800m in new revenue, a major reorganisation, and settling its differences with activist investor Carl Icahn.

Investors punished Google last week for its financial results because its profit, though not its revenue, was lower than analysts expected. Google had words of caution about the overall economy hurting its advertising business, though not actually much evidence besides some reduced spending in the real estate sector.

Yahoo! chief financial officer Blake Jorgensen said: "Despite a difficult economic environment, we posted solid results in line with the ranges we indicated in April...Our diverse advertiser base and compelling value proposition for our customers were key factors behind Yahoo!'s strong second-quarter performance."

Revenue was $1.8bn, and "operating cash flow on a normalized basis [was] $449m".

Original article: Yahoo earnings decline, miss estimates from CNET News.com