NEW YORK (CNNMoney.com) -- Yahoo posted higher second-quarter earnings Tuesday that topped Wall Street expectations, but sales missed estimates.
The company said its net income for the second quarter rose 51% from last year, to $213 million. Excluding restructuring charges in both periods, Yahoo earned 15 cents a share in the latest quarter, up from 10 cents a year earlier.
Analysts polled by Thomson Reuters, who typically exclude one-time charges from their estimates, expected earnings of 14 cents per share.
Sales for the Sunnyvale, Calif., company rose 2% to $1.6 billion. But excluding traffic acquisition costs -- the advertising costs shared with partners -- Yahoo had sales of $1.13 billion. That missed analysts' forecast of $1.16 billion.
Display advertising on Yahoo's owned and operated sites grew 19% compared with last year. But those gains were partially offset by an 8% drop in search advertising revenue.
A leaner Yahoo: Yahoo has focused on streamlining under the leadership of Carol Bartz, who replaced company co-founder Jerry Yang in January 2009. In addition to its search tool, Yahoo offers products such as e-mail and personal ads.
But Bartz has said her mission is to make Yahoo a more focused company in order to better compete with rivals. Last week, Google (GOOG, Fortune 500) reported quarterly profit that rose from its year-ago results but missed Wall Street forecasts.
Search was "sluggish" over the entire second quarter, Bartz said in a conference call. But Yahoo's ad revenues are up, Bartz said, adding that Yahoo is tapped into the local ad market.
Bartz also cited success of new ad space on the Yahoo log-in page, which rolled out in June. General Motors ads "performed quite well" for the Malibu, Traverse and Equinox vehicles, Bartz said.
"With us you're buying an audience, not a site," she added. "We're targeting, and we give everyone a unique experience."
More than words: "Users want to go beyond just words on a screen," Bartz said on the call. They want video, they want a social aspect and they want it very personally tailored to them."
On the social front, Yahoo in the second quarter "deepened its integration with Facebook" through Yahoo! Pulse, which lets users link the two accounts and share updates with friends across both networks. The company also acquired Koprol, an Indonesian location-based social network, as well as Associated Content Inc.
Yahoo also made several moves in the mobile realm. The company launched a mail and messaging system for the Android mobile operating system, as well as HTML mail and news sites for the Apple (AAPL, Fortune 500) iPhone. Games from social company Zynga will be available on Yahoo.
Herbalife shares tumble after the maker of nutritional supplements reports earnings that fall short of analysts' estimates. More
New annual report from U.S. government shows the long-term prognosis for Medicare has improved thanks to slower health spending, while the outlook for Social Security remains unchanged. More
Online dating site OkCupid found its users were more likely to have conversations when it told them they were more compatible than in reality. More
Actor-founded This Bar Saves Lives had Hollywood connections, but learned Start-Up 101 the hard way. More
Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More