Yahoo welcomes good news

Q2 revenue up 6% despite 'external swirl'

Yahoo managed to turn in satisfying financial results in one of its most tumultuous quarters in history.

The Internet pioneer said Tuesday that it earned $131 million in the second quarter, 18% below the same quarter a year ago, on revenue that went up 6% to $1.8 billion. Revenue minus traffic-acquisition costs stood at $1.35 billion, slightly less than analysts predicted.

Wall Street, though, appeared to be in a giving mood, since so much bad news already has been factored into Yahoo stock, so shares rose more than 2% in after-hours trading after dropping 1.3% to $21.40 during the regular session.

The company offered full-year guidance of up to $7.85 billion, which wasn't too far off the top end of the $8 billion guidance that Yahoo gave three months ago.

The company said it spent $22 million fending off the threat of a proxy battle by Carl Icahn and in hiring advisers to weigh in on a Microsoft bid to buy all or part of the company. The proxy matter was settled Monday when Yahoo offered Icahn a board seat and two more board seats to be filled by his allies.

Yahoo CEO Jerry Yang, during a conference call with analysts Tuesday, thanked employees for focusing on their jobs during the quarter instead of the distracting Microsoft drama, which Yahoo president Susan Decker called "substantial external swirl."

Unlike many media companies that have been decreasing their ranks, Yahoo said it added 500 employees during the quarter for a total of 14,300.

Display advertising has been weak, executives said, because of a struggling U.S. economy and because advertisers simply prefer to narrowly target consumers through search advertising.

Yang also said -- referencing Microsoft's former intentions to buy Yahoo for about an $18 billion premium to what the company was worth Tuesday -- that he has "looked at every alternative" to increase shareholder value.

He also alluded to more initiatives being secretly discussed that could be announced in the "days and weeks and months ahead."