updated 5/9/2007 5:42:55 PM ET 2007-05-09T21:42:55

Yahoo Inc. will close its online auction service for North America next month, signaling the Internet powerhouse’s intention to focus on more profitable endeavors as it tries to snap out of a financial malaise.

The Sunnyvale-based company’s auctions in the United States and Canada will end June 16, although some tools will remain accessible until Oct. 29. The closure won’t affect Yahoo’s auction services in Hong Kong, Singapore and Taiwan.

Yahoo is retreating from North America’s auction market nearly nine years after launching the service.

The retrenchment coincides with Yahoo’s plans to phase out its original photo service this summer in favor of a more recent offering, called Flickr, that provides more sophisticated tools for sharing pictures.

The decisions to close the auction and photo services provide the latest indication that Yahoo is reassessing the value of its far-flung Web properties in an attempt to reverse a revenue slowdown that has disappointed investors.

“Yahoo is continuing to align our resources to focus on core strategic priorities and deliver a superior user experience, and as part of this effort, we are re-prioritizing some products,” the company said in a statement provided Wednesday.

After stumbling through much of 2006, Yahoo opened the first three months of this year with an 11 percent decline in its profit. The slowdown helped spur speculation last week that Microsoft Corp. might try to buy Yahoo and forge a business partnership as both companies try to combat online search leader Google Inc.

Yahoo’s reshuffling mirrors some of the suggestions made last fall by one of the company’s own executives, Brad Garlinghouse, who had urged the management to pull the plug on some less popular or overlapping services in a widely distributed internal memo. Garlinghouse’s missive became known as the “Peanut Butter Manifesto” because it argued Yahoo had spread itself too thin.

Closing the North American auction service was a “no-brainer” because Yahoo had such an insignificant market share, said Bill Tancer, general manager of global research for Hitwise, which tracks Internet trends.

Yahoo attracted less than 0.2 percent of the U.S. traffic to auction sites during the week ended May 5 compared with nearly 85 percent for the longtime market leader eBay Inc., according to Hitwise.

“If you can’t compete in the space, it makes no sense to be there,” Tancer said.

By closing its auction site, Yahoo also might score points with San Jose-based eBay, one of the company’s major advertising partners.

Yahoo’s closure of its original photo service is more risky because it actually is slightly more popular than Flickr. In the week ending May 5, the first-generation photo service attracted 6 percent of the U.S. traffic in its category compared with 4.8 percent for Flickr, Hitwise said.

But Flickr tends to attract more urban consumers who tend to spend more on technology — a potentially more lucrative demographic that Yahoo apparently hopes to build upon.

Yahoo is encouraging the users of its original photo service to embrace Flickr. Recognizing not everyone will want to make the leap, Yahoo is offering ways for users to transfer their photos to competing services, including Shutterfly, Photobucket, Kodak Gallery and Snapfish.

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