Yahoo Q2 profit drops 19% to $131M

Hit by a weak online advertising market and weeks of takeover speculation, Yahoo Inc. on Tuesday came in under analysts' predictions with second quarter net income of $131 million, or 9 cents a share, down from $161 million, or 11 cents a share in the same period last year.

The Sunnyvale-based company (NASDAQ:YHOO) said revenue excluding payments made to other Web sites to acquire traffic was up 8 percent, reaching $1.35 billion.

Analysts, on average, expected earnings of 10 cents a share on $1.38 billion in net revenue.

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"Yahoo is executing against its strategy, and we believe is well positioned for long-term growth and maximizing stockholder value," said Jerry Yang, co-founder and CEO. "Yahoo saw benefits in the second quarter from a number of the strategic initiatives that we have been delivering against, including the roll out of innovations in search and the announcement of a number of important partnerships. We are seeing validation that we have the right strategy as we continue to make transformational investments that position us to take advantage of pivotal trends driving growth on the Internet."

Yahoo CFO Blake Jorgensen said that "Despite a difficult economic environment, we posted solid results in line with the ranges we indicated in April."