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'This is good, and at the same time, unsatisfactory'

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Yahoo!'s revenue fell slightly compared to last year, thanks to rubbish sales of US display adverts.

The portal failed to see much joy from its search agreement with Microsoft.

Total revenue was $1.07bn for the three months ended 30 June 2011, a 5 per cent drop on the $1.12bn it made in the same quarter of 2010. Income from operations was $191m compared to $175m in the second quarter of 2010. Carol Bartz said the results were "a mix of good, encouraging, and at the same time, unsatisfactory."

She said there were two main issues: the ongoing row over Alipay and poor performance of display ads.

Bartz said the company was making progress over Alipay but accepted that "until every word is finalized and every document is signed, we're simply not done".

Revenue from display, excluding payments made to partners sites for traffic, was up 5 per cent globally but down in the US, the lion's share of Yahoo!'s market.

European revenues were up 27 per cent; Asia Pacific was up 20 per cent. Bartz said the first half of the quarter in US was reasonable, but that the second half had seen demand fall.

Bartz blamed fallout from the company's reorganisation of its sales team, which led to more people than expected leaving the company. She said it was not about the economy, although that hadn't helped, nor about competition or engagement.

She said Yahoo!'s sales team was now back up to full strength but "many of the account execs are new to the roles, and it will take time for them to get up to speed on their new books of business". She said this made it unlikely that Yahoo! would hit display targets for the full year target of between 13 and 16 per cent growth.

Search revenues, excluding TAC (traffic acquisition costs), were down 15 per cent to $371m. Yahoo! loses its guaranteed revenue from its search deal with Microsoft in the first quarter of 2012.

A transcript of Bartz's Q&A is available from SeekingAlpha here.

Yahoo's numbers are available to download here. ®

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