Yahoo Q3 income dips 26% on lower ad sales

Internet major Yahoo has reported a 26% drop in its net income to $293 million for the July-September quarter, primarily due to lower advertising revenues.

The company posted revenue of $1.21 billion for the third quarter ended September 30, 2011, a 24% decline from the year-ago period.

For the current quarter, Yahoo expects revenue in the range of $1.28 billion to $1.4 billion. The company also projected income from operations between $200 million and $260 million for the fourth quarter.

The company attributed the revenue fall mainly to 'the required change in revenue presentation related to the search agreement and the associated revenue share with Microsoft'.

Yahoo, which had entered into a search tie-up with Microsoft as part of efforts to streamline its operations, has so far not benefited much from this partnership.

Yahoo continued to witness decline in display-ad sales, which includes graphical, interactive and video ads on its various internet platforms. The display revenue stood at $449 million in the quarter, almost flat as compared to $448 million for the year-ago period.

The internet firm has been struggling to increase its market share and the company recently sacked Carol Bartz as its CEO, presumably after failing in market gaining efforts.

According to media reports, private-equity firms such as Silvern Lake Partners are considering bidding for Yahoo. Besides, Chinese internet company Alibaba Group's head Jack Ma was reportedly said that he was "interested" in buying Yahoo.

Last month, an internal memo sent by Yahoo chairman Roy Bostock and co-founders David Filo and Jerry Yang to their employees had sparked rumours about a possible sale of the Internet company.

In the memo, the top executives said that a "strategic review" process was on to bring the company back to robust growth path and multiple parties have "expressed interest in a number of potential options."

However, they did not specify the "potential options", neither did they name the "multiple parties" which had evinced their interest in the company.