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Sales: $1.6 billion, down 13%
Profit: $141.4 million, up 7.8%

How was Yahoo's quarter? It depends on how you look at it.

Profit was up 7.8%, surprising everyone. Analysts had projected a 15.6% earnings drop. Yahoo took a hatchet to spending, cutting 700 jobs in the quarter and focusing energies on its core brands like search, email and its homepage. A new version of Yahoo.com debuted Tuesday.

But sales were way down, as search ads suffered amid a pull-back from advertisers. Still, rival Google suffered through the same market and wound up increasing its quarterly revenue from a year ago.

Yahoo's revenue guidance also disappointed slightly, with the company saying that the coming quarter looks dim as well. Looking ahead, many analysts agree that the best option for the company may be to sell all or a part of its search business to Microsoft. With the immediate success of Bing eating into Yahoo's search share, joining forces may be the best -- or perhaps the only -- way to challenge Google for the search throne.

NEXT: Intel
Last updated July 24 2009: 4:51 PM ET
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