Yahoo's third-quarter results showed little evidence ofending the financial funk that got former CEO Carol Bartz fired last month.
The performance, announced Tuesday, may increase thepressure on Yahoo Inc. to sell itself in parts or as a whole.
Yahoo earned $293 million, or 23 cents per share, in theJuly-September period. That represented a 26 percent decline from net income of$396 million, or 29 cents per share, at the same time last year.
The numbers for both this year and last year were boosted byone-time gains. After adjusting for those items, Yahoo said it would haveearned 21 cents per share in the latest quarter versus 16 cents per share lastyear.
The earnings exceeded the average estimate of 17 cents pershare among analysts surveyed by FactSet.
But Yahoo's revenue is still eroding at a time when theInternet advertising market is growing. That's a sign of the challenges facingYahoo as it falls further behind Internet search and advertising leader GoogleInc. and Facebook, the Internet's most popular hangout.
Revenue fell 24 percent from the same time last year to$1.22 billion.
After subtracting ad commissions, Yahoo's revenue stood at$1.07 billion. That was a 5 percent drop from the same time last year.
The revenue slump will extend into the final three months ofthe year — typically the busiest time for online advertising because itcoincides with the holiday shopping season.
Yahoo's fourth-quarter forecast calls for net revenue torange from $1.12 billion to $1.24 billion. If Yahoo hits the middle of thattarget, its fourth-quarter revenue will be down by about 6 percent from lastyear.
Normally, Yahoo's stock falls after a lackluster quarterlyreport or a cautious outlook pronouncement. But that didn't happen on Tuesday,partly because many investors have been betting that Yahoo's financialmediocrity will increase the likelihood that the company will decide to sellitself.
Yahoo shares gained 53 cents, or more than 3 percent, to $16in Tuesday's extended trading.
Tim Morse, Yahoo's interim CEO, declined to address thetakeover speculation in a brief interview Tuesday with The Associated Press.