- Associated Press - Tuesday, July 19, 2011

SAN FRANCISCO (AP) - Yahoo Inc. plodded through another disappointing performance in the second quarter, a familiar script that’s wearing thin with exasperated investors.

The results released Tuesday are likely to intensify the pressure that had already been mounting on Yahoo CEO Carol Bartz as she enters the final 17 months of her four-year contract.

In a sign of discontent, Yahoo shares sagged after the numbers came out, deepening a steep drop in Yahoo’s market value that has been driven during the past two months by uncertainty over a key investment in Chinese Internet company Alibaba Group.

The second quarter yielded a “mix of good, encouraging and, at the same time, unsatisfactory” developments, Bartz told analysts in a Tuesday conference call.

Bartz said the biggest problem stemmed from a shakeout in Yahoo’s advertising sales force that contributed to a revenue downturn in the U.S. during June.

“We didn’t have enough sales people in front of the big clients,” she said.

The trouble is spilling over into the current quarter, prompting Yahoo to offer a revenue forecast for the July-September period that fell below analyst estimates.

Yahoo shares shed 31 cents, or more than 2 percent, to $14.28 in Tuesday’s extended trading. The stock has plunged by more than 20 percent since Yahoo disclosed in May that Alibaba had spun off an online payment service called Alipay. That move has cast doubt about the value of Yahoo’s 43 percent stake in Alibaba.

In Tuesday’s conference call, Bartz reiterated her confidence that Alibaba will fairly compensate Yahoo for the Alipay spinoff. She didn’t provide a timetable for reaching a resolution.

Bartz, 62, was hired in January 2009 to engineer a turnaround after Yahoo had fallen further behind Internet search leader Google Inc. under its two previous CEOs, its co-founder Jerry Yang and former movie studio boss Terry Semel.

The change in command hasn’t paid off yet, although Yahoo is making more money under Bartz because of layoffs, service closures and other cost-cutting moves since her arrival.

Google, though, has gotten even stronger in the past two years while Facebook, the owner of the Web’s most popular hangout, has emerged as a formidable threat that’s attracting more of the major marketing campaigns that once went to Yahoo.

Even a much-ballyhooed Internet search partnership with Microsoft Corp. has gotten off to a rough start. The alliance so far hasn’t produced as much revenue as Bartz hoped, although she said the shortfall wasn’t as bad in the spring as it was during the first three months of the year. Enough progress has been made to encourage Yahoo to proceed with its plans to adopt Microsoft’s technology for selling search advertising in other countries outside North America later this year.

Yahoo earned $237 million, or 18 cents per share, during the three months ending in June. That’s an 11 percent increase from $213 million, or 15 cents per share, at the same time last year.

The earnings matched the projections among analysts surveyed by FactSet.

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