Yahoo last night reported an 11% rise in profit in the second quarter from a year ago, despite a fresh drop in revenue linked to its Internet search agreement with Microsoft.
The Internet company said it had net profit of $237m, up from $213m in the second quarter last year, slightly exceeding market expectations. Excluding special items, earnings per share were 19 cents, a cent above the average analyst forecast.
Revenue, excluding commissions paid to partner websites, was $1.08 billion, a decline of 5% year-on-year and worse than market expectations of a 2% drop.
The company said in a statement the sales decline was mainly due to the revenue share related to its search agreement with Microsoft. Microsoft and Yahoo entered into a search and advertising partnership in 2009 which calls for Microsoft to eventually power searches at all Yahoo websites.
Excluding that agreement and other special items, the California-based firm said that revenue minus commissions to partners for the second quarter increased 1% from a year earlier.
Both net profit and revenue had fallen in the first quarter compared to the same time in 2010.
'We made clear progress in search, and saw strong growth in engagement on our media properties,' Yahoo chief executive Carol Bartz said.
'We experienced softness in display revenue in the second half of the quarter due to comprehensive changes we have made in our sales organisation to position ourselves for more rapid display growth in the future,' she added.
