updated 7/22/2008 5:53:17 PM ET 2008-07-22T21:53:17

Yahoo on Tuesday posted a nearly 19 percent fall in net profit, and net revenue short of lowered Wall Street expectations, as it faced a weakening economy and the distraction of Microsoft pursuit.

Chief Financial Officer Blake Jorgensen told Reuters in an interview the company was not changing its financial view for 2008, despite an admittedly difficult economic environment that is weighing on online advertising.

Yahoo shares rose close to 1 percent in extended trading.

The Internet pioneer, which just settled a proxy battle with activist investor Carl Icahn, said second-quarter net income fell to $131 million, or 9 cents per diluted share, from $161 million, or 11 cents per share, a year earlier.

Excluding one-time items, profit was $139 million, or 10 cents per share, down from $163 million, or 12 cents per share, a year ago.

Gross revenue rose 6 percent to $1.798 billion. Net revenue excluding payments to affiliated Web sites that carry Yahoo advertising services rose 8 percent to $1.35 billion.

Wall Street analysts, on average, were looking for net revenue of $1.37 billion, according to Reuters Estimates.

Yahoo forecast third-quarter revenue of $1.78 billion to $1.98 billion and full-year revenue of $7.35 billion to $7.85 billion. It projected operating income before depreciation, amortization and other items of $405 million to $465 million for the third quarter and $1.83 billion to $1.98 billion for the year.

Yahoo’s earnings come a day after it agreed to appoint Icahn and two of his nominees to its board, ending a proxy battle that would have otherwise been decided at its August 1 annual meeting, and reducing the chances of immediately revisiting a Microsoft deal.

(Msnbc.com is a joint venture of Microsoft and NBC Universal.)

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