Search engine Yahoo’s forecast for revenue in the third-quarter disappointed Wall Street and that caused its shares to fall.
Yahoo’s second quarter net income was up but advertising revenue dropped. Chief Executive Carol Bartz has reversed course on recent cut costs and now plans to increase spending despite persistent weakness in the advertising market. Yahoo will hire more engineers and sales and marketing staff and invest in new products and branding. In a conference call, Bartz did not address reports about a partnership with Microsoft, but analysts said some of her comments suggested an agreement on internet searches and advertising could be in the works between the two. Some in the industry believe they need to team up to better compete with Google.