Yahoo 2Q profit erodes but not as badly as feared

While the results released Tuesday missed analyst expectations, the performance wasn't as bad as many investors feared after Internet search and advertising leader Google Inc. disappointed Wall Street with its second-quarter earnings last week.

What's more, Yahoo management maintained its revenue outlook for the remainder of 2008. The confident stance eased concerns about Yahoo's financial erosion worsening amid the dreary economy in the United States and parts of Europe.

Yahoo shares rebounded 58 cents in extended trading after falling 27 cents to finish Tuesday's regular session at $21.40.

"They did better than the worst expectations," said Canaccord Adams analyst Colin Gillis. "It was a 'rice-cracker' quarter. It didn't taste great, but it wasn't totally horrible either."

The Sunnyvale, Calif.-based company earned $131 million, or 9 cents per share, from April through June. That was down 18 percent from $161 million, or 11 cents per share, at the same time last year.

It's the ninth time the past 10 quarters that Yahoo's profit has ebbed from the previous year.

Analysts had projected earnings of 11 cents per share in the most recent quarter, according to Thomson Financial.

A big chunk of the earnings shortfall stemmed from the bills that piled up as Yahoo dealt with an unsolicited takeover bid from Microsoft Corp. and a now-resolved battle for control of its board with activist investor Carl Icahn.

The drama cost Yahoo $22 million in the second quarter, mainly for outside advisers and related legal defense costs. Coupled with its first-quarter expenses, Yahoo has now spent $36 million on its wrestling match with Microsoft and Icahn.