Internet giant Yahoo posted a 37-per cent slump in third-quarter profit on Tuesday and announced it would buy back up to three billion dollars' worth of its stock.
The company said "unanticipated challenges" led to third-quarter net income of 159 million dollars, or 11 cents a share, compared to 254 million in the same period a year earlier.
"While we are tremendously excited about many things happening at Yahoo, we are not satisfied with our third-quarter financial performance," chief executive Terry Semel said in a statement.
Excluding the share paid to search-advertising partners, Yahoo's net revenue rose 20 percent from a year earlier to 1.12 billion dollars.
Analysts had expected the 11 cent per share profit, but on higher net revenue of 1.14 billion.
Yahoo disappointed analysts anew by forecasting fourth-quarter revenue in a range of 1.15 to 1.27 billion dollars, underperforming Wall Street investor targets of 1.31 billion dollars.
The company also said that it planned to repurchase up to three billion dollars' worth of its outstanding common stock over the next five years, depending on factors including market conditions and the share price.
"We believe Yahoo shares are halfway through a bottoming phase," an RBC Capital Markets analysis concluded, adding the stock would tread water because the weakness revealed on Tuesday had already been factored into the price.
Yahoo had ample free cash reserves and was valued in line with other media companies, according to RBC.
While Yahoo is the largest online search portal, with 325 million users, it has had problems fully cashing in on those visitors, RBC reported.
"I am not satisfied with our current financial performance and I intend to improve it," Semel said in a conference call with investors and reporters.
"We are not exploiting our considerable strength as well as we should be and we are committed to do it better."
Semel announced Yahoo's new Panama Project platform for advertisers went live on Tuesday and "marked a significant turning point" in targeting advertising and would "unlock the potential" of its huge base of users.
Semel vowed that Yahoo would be "laser-focused" on "closing the gap in monetizing services, widening the lead in graphical advertising, and seizing the lead in social media and mobile search."