Yahoo share gain short-lived after earnings

Yahoo Inc. shares moved higher Wednesday but ultimately lost ground, a day after the company reported a drop in earnings and missed Wall Street's forecasts.

Yahoo shares fell $1.01, 4.7 percent, to close at $20.39. They had risen has high as $22.48 in the session.

The company had reported after the market closed Tuesday that it earned $131 million, or 9 cents per share, in the second quarter. Analysts had projected 11 cents per share, according to Thomson Financial.

In the same period last year, profit was $161 million, or 11 cents per share. This marked the ninth time the past 10 quarters that Yahoo's profit ebbed from the previous year.

However, the results weren't as bad as many investors feared, given that Google Inc. disappointed Wall Street with its second-quarter earnings last week. Yahoo also maintained its revenue outlook for the remainder of 2008.

A big chunk of the earnings decline stemmed from the $22 million in legal bills and related expenses that Yahoo rang up while dealing with a takeover bid from Microsoft Corp. and a battle for control of its board with Carl Icahn.