Bartz Makes Headway Getting Yahoo on Track

The Sunnyvale, Calif., company's third-quarter profit surged, helped by Ms. Bartz's cost-cutting and an investment gain. Revenue fell 12% to $1.58 billion from a year ago, but executives indicated that spending on Internet ads was stabilizing, particularly from large marketers.

"There were a couple of encouraging things," Tim Morse, Yahoo's finance chief, said on a conference call. "The ad dollars are starting to flow a little bit better." Mr. Morse disclosed in an interview that Yahoo hired former General Electric Co. executive Andrew Siegel as its new head of mergers and acquisitions, tasked with continuing to evaluate which businesses the company should sell, as well as scout potential targets.

Rival Google Inc. announced last week that revenue grew 7% in its third quarter as executives announced confidently that the worst of the recession had passed.

Ms. Bartz didn't participate in Tuesday's conference call because of an unspecified illness that was described as "nothing serious" by Mr. Morse. In the quarter, Yahoo's profit more than tripled to $186.1 million, or 13 cents a share, up from $54.3 million, or four cents a share, a year ago. Those results included a $98 million gain on the sale of Yahoo's investment in Chinese Internet company Alibaba.com.

The improved profit comes as Ms. Bartz cut costs throughout the company. Virtually all categories of expenses—including sales and marketing and product development—fell in the quarter from the year-earlier period. Mr. Morse said the company reduced its bandwidth and equipment costs and hired more slowly than it had planned.

Yahoo shares rose more than 5% in after-hours trading to their highest level in more than a year. The stock finished the 4 p.m. trading session down five cents to $17.17 on the Nasdaq Stock Market.

"This is a big relief for investors," said Doug Anmuth, an analyst at Barclays Capital. He praised Ms. Bartz's internal "blocking and tackling," echoing other analysts and investors who say the CEO has proven adept at bringing some discipline to the company through moves such as building a new Yahoo home page on one technology platform and removing layers of management. link....