SAN FRANCISCO (Reuters) – Yahoo Inc's net revenue declined slightly in the second quarter on weakness in its display advertising business, and shares of the Internet search company dropped nearly 2 percent in after-hours trading.
Yahoo reported net income of $237 million, or 18 cents a share, compared with $213 million, or 15 cents a share, in the year-earlier quarter.
The company forecast third-quarter net revenue, which excludes the fees that Yahoo pays to partner websites, of between $1.05 billion and $1.1 billion.
In a statement, Yahoo Chief Executive Carol Bartz said the company saw "softness" in its display advertising revenue during the second half of the quarter due to changes in Yahoo's sales organization aimed at positioning Yahoo for "more rapid display growth in the future."
Yahoo said revenue from display advertising, which represents roughly half of Yahoo's business, inched up 2 percent year-over-year in the second quarter, compared with the 6 percent growth rate achieved in the first quarter.
Search revenue declined 45 percent year-over-year to $467 million.
Last quarter, Yahoo said its search partnership with Microsoft was taking longer than expected to pay off due to some technical imperfections in the search advertising system. As a result, Yahoo said its revenue per search won't rise to levels it experienced pre-Microsoft until the end of the year.
Yahoo is one of the most popular destinations on the Internet and a leading provider of online display ads in the United States, but the company is facing increasing competition from social networking service Facebook and continuing pressure from search leader Google.
Yahoo said net revenue in the second quarter was roughly $1.1 billion, compared with $1.13 billion in the year-earlier period.
The company's shares were down 21 cents at $14.38 in after-hours trade.
(Editing by Steve Orlofsky)
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