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Yahoo shows sluggish earnings growth

SAN FRANCISCO (AP) — Yahoo Inc. shuffled through another quarter of sluggish growth, a performance that may further test the patience of the Internet company's already restless shareholders.

The third-quarter results announced yesterday also seem likely to intensify the pressure on CEO Carol Bartz to end a four-year financial funk amid speculation that the company could become a takeover target because of its slumping stock price.

Yahoo made some progress on the earnings front, thanks largely to cost-cutting moves since Yahoo hired Bartz to orchestrate a turnaround 21 months ago.

Net income totalled $396 million, or 29 cents per share, in the three months ending in September. That was more than double earnings of $186 million, or 13 cents per share, at the same time last year.

But this year's figures included a hefty one-time gain from Yahoo's sale of its help-wanted site, Hot Jobs, to Monster Worldwide Inc. If not for that boost, Yahoo's earnings would have been 16 cents per share, a penny above the average estimate among analysts surveyed by Thomson Reuters.

Revenue for the quarter totalled $1.6 billion, up by less than two percent from $1.58 billion at the same time last year. The paltry gain contrasted with a 23 percent revenue increase at Google Inc., which competes against Yahoo for online advertisers.

After subtracting advertising commissions, Yahoo's third-quarter revenue was $1.12 billion — about $10 million below analyst estimates.

Yahoo shares crept up three cents after the third-quarter numbers came out. The stock finished yesterday's regular trading session at $15.49, down 44 cents.

Yahoo spent $868 million during the quarter buying back its own shares. While that helped lift earnings per share, the company's stock price remains down by eight percent so far this year. And the stock remains far below the $33 per share that Microsoft offered to buy the company in its entirety in May 2008, only to have Yahoo balk at the price.

The third-quarter showing is the latest indication that Bartz's efforts to shake up Yahoo haven't been enough to win back advertisers who are increasingly spending more of their money at Google and trendier online hangouts such as Facebook.

Yahoo has been trying to piggyback on Facebook's rising popularity by connecting more of its services to the social network, but so far the strategy isn't producing a big jump in advertising.