Yahoo results show mixed picture for CEO Marissa Mayer

Yahoo said Tuesday its second-quarter profit rose sharply from a year ago, but revenues lagged, offering a mixed picture for chief executive Marissa Mayer's turnaround efforts.

Net profit rose 46 percent from a year ago to $331 million, slightly better than expected, but revenues excluding payments to partners fell one percent to $1.07 billion, the Internet giant said.

"I'm encouraged by Yahoo's performance in the second quarter. Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week," said Mayer.

Mayer cited the company's new Yahoo News, the new Yahoo Sports app, the redesigned Yahoo search, the new Flickr, the new Yahoo Mail for tablet, the Yahoo Weather app, and the company's new Yahoo app with Summly.

"This quarter drove tremendous improvements in our product line and our users responded with increased usage and engagement," she said.

She said the quarter was "one of the most productive in the history of Yahoo"

The company's strategy is based on "people and products, then traffic and revenue," she said, and that traffic is now growing again.

Mayer was hired from Google a year ago to help turn around the Internet pioneer, which had seen its fortunes fade.

Since then, Yahoo has been on a buying spree, and has also sold shares in China's Alibaba to boost its cash.

(Also see: Yahoo closes $7.6 billion deal with Alibaba Group)

Its most publicized deal was a billion-dollar acquisition of the blogging platform Tumblr, expected to help bring a younger audience to Yahoo.

For its key advertising segments, however, Yahoo saw its display revenues excluding partner payments fall 11 percent to $423 million, while search ad revenue on the same basis fell five percent to $385 million in the quarter.

"Fortunately for the still-new CEO Marissa Mayer, Yahoo is currently not being judged on its revenue growth as the company is shrinking some efforts to focus on better earnings opportunities elsewhere," said Jon Ogg at 247 Wall Street.

"Yahoo showed that it made nine acquisitions to strengthen its products, content, technology, and people."

Shares in Yahoo fell 2.2 percent to $26.29 in after hours trade.

In a negative for Yahoo, the company downgraded its outlook for revenues for the third quarter and the full year.

According to the research firm eMarketer, Yahoo has failed to keep face with rivals in advertising.

Despite seeing growth, Yahoo's share of global digital ad spending is expected to decline to 3.1 percent in 2013 from 3.37 percent last year, eMarketer said. Google and Facebook are grabbing a larger share of that market.