Yahoo's earnings fell in the most recent quarter as the company struggled to revive its online advertising business, thought it still managed to beat analysts' expectations.
"It looks OK, nothing spectacular, but nothing disastrous, and nothing disastrous is good news for these guys," said Macquarie Research analyst Ben Schachter. "They're keeping their heads down and just trying to execute. As long as these guys didn't have completely terrible guidance, and they didn't, they should be OK."
For the third quarter, Yahoo reported its earnings excluding items fell to 21 cents a share in the third quarter from 29 cents a share a year earlier.
Net income fell to $293 million from $396 million a year ago.
Net revenue, which excludes fees paid to partner websites, fell to $1.072 billion from $1.12 billion in the 2010 quarter.
Still, earnings beat and revenue hit: Analysts had expected Yahoo to post earnings of 17 cents a share on revenue of $1.068 billion, according to Thomson Reuters.
That was enough for Wall Street: Shares of Yahoo rose more than 3 percent in after-hours trading. (Click here for the latest after-hour quote.)
Not everyone was pleased by the results, however.
"What I really want to see is that they can stop the declining revenue. If we got a little revenue beat, that would be really nice. You can always squeeze more out of earnings," said BGC Partners analyst Colin Gillis.
Yahoo has been in a state of chaos since the departure of Bartz. The company retained investment banking firm Allen & Co to help conduct a "strategic review" of its business and is reportedly working with executive search firm Heidrick & Struggles to find a new CEO.
Interim-CEO Tim Morse declined to provide an update on either the strategic review or the CEO search process. Of the latter, he said only that "the board process was underway."
A number of potential buyers have expressed interest in a deal with Yahoo. Private equity firms Silver Lake Partners, Providence Equity Partners, Bain Capital, Hellman & Friedman, Blackstone Group, and KKR are among those likely to get a look at the limited financial data Yahoo's advisers are circulating.
Strategic buyers, including AOL, Chinese e-commerce giant Alibaba, which already has a partnership with Yahoo, and Microsoft
Despite its struggles, Yahoo continues to be a marquee destination, with page views to the company's media properties up 9 percent in the quarter. The flip side, however, is that search queries were up a paltry 1 percent, while search page views fell 3 percent.
The Sunnyvale, Calif., company, which has struggled to revive its online advertising business, said it agreed to extend the revenue per search guarantee in its deal with Microsoft through March 2013. The extension applies only to the United States and Canada, however.
Yahoo said it remains fully committed to the success of the search alliance and the extension represents an "important sign of that commitment."
Earlier this year, however, Yahoo said the partnership was taking longer than expected to pay off due to technical imperfections in the search advertising system. As a result, Yahoo said it did not expect revenue per search to return to pre-Microsoft levels until the end of the year.
Morse also declined to provide an update on when revenue per search would return to pre-deal levels.
"Having extended the RPS guarantee, there's no real reason to be talking about when we think the line crosses," Morse said.
Morse did say that premium display advertising sales were on target for the third quarter, but that non-premium ad sales has a bit of an "underrun." Morse added that, on a year-over-year basis, premium display ads sales were up less than 5 percent and non-premium ad sales were down a similar amount.
— Reuters contributed to this article.