Yahoo has little reason to smile. While its revenue was up 6 percent in the second quarter compared with that a year ago, its net income was down by nearly 19 percent.

The company’s revenue was $1.8 billion, compared with $1.7 billion in the same quarter in 2007. Meanwhile, net revenue - excluding commissions to advertising partners - was $1.35 billion, just 8 percent above the $1.24 billion achieved 12 months ago.

Wall Street analysts expected Yahoo to deliver net income for the quarter of $161 million or 11 cents a share. However, the search company reported net income for the quarter of $131 million, or 9 cents a share.

Yahoo was, however, satisfied with the results, noting that profit had been hit by $22 million in costs related to negotiating with Microsoft, the proxy fight with Carl C. Icahn, and related lawsuits.

Despite the poor results, no one, it seems, was all that surprised. Yahoo’s share price increased to $21.89 in after-hours trading after releasing these results.

Source: Miguel Helft, “Yahoo’s Revenue Rises a Bit, but Profit Falls 18%”, July 23, 2008

The current Yahoo board has entered into a “truce” with millionaire activist investor, Carl C. Icahn.

In exchange for agreeing to end his proxy bid to oust Yahoo’s directors from the board of the search engine company, Mr Icahn has been granted three seats on the Yahoo board, which has been expanded from 9 to 11 seats. Mr Icahn will get one seat and another will probably be given to former chairman and chief executive of AOL, Jonathan Miller.

Mr Icahn, a vocal proponent of selling Yahoo to Microsoft is not expected to stop his efforts to sell all or part of the search company to the Redmond-based software giant. Let’s see if he continues to stir up trouble from within the top echelon of the company…

Source: Miguel Helft, “Yahoo Deal Wards Off Proxy Fight”, The New York Times, July 22, 2008

If Carl C. Icahn seizes control of the board of Yahoo, Microsoft’s purchase of the No. 2 Internet search company could be back on the agenda.

In co-ordinated statements released to the media over the weekend and on Monday respectively, Mr Icahn and Microsoft signaled that the companies would renew acquisition talks if Icahn wins his proxy fight and takes control of the board.

So what’s standing in Icahn’s way? Yahoo’s largest investors need to vote on whom they think should remain on, or join, the board. Should the vote go Icahn’s way the current board will be replaced by Mr Icahn and his supporters, while Yahoo-founder and current CEO, Jerry Yang, will be out the door.

Microsoft’s interest in buying Yahoo - or simply its search technology - coupled with its plans to purchase semantic search engine Powerset, seem only to highlight the company’s frustration with being a distant third in both the search and search advertising markets.

Source: Miguel Helft, “Microsoft Is Icahn’s Ally in Pursuit of Yahoo”, The New York Times, July 8, 2008