Yahoo's net income fell year-over-year in a quarter that saw Yahoo leadership change hands amid criticism that the company failed to capitalize on the explosive growth of the search-engine advertising market.

Yahoo also lowered guidance for the third quarter and for 2007 as it reported financial results Tuesday.

Revenue excluding traffic acquisition costs for Yahoo's second quarter ended June 30 were $1.244 billion (£60 million), slightly higher than the $1.242 billion Thomson First Call analysts had estimated. Net income for the quarter was $161 million or $0.11 per share, in line with analyst estimates and slightly lower than the $164 million or $0.11 per share for the same period in 2006.

Operating income for the second quarter of 2007 was $185 million, a 19 perc ent decrease compared to $230 million for the same period of 2006. Cash flow from operating activities for the second quarter of 2007 was $406 million, a 6 per cent decrease compared to $430 million for the same period of 2006.

Tuesday marks the first time co-founder Jerry Yang faces investors for an earnings period since taking over the CEO position on June 18, when former CEO Terry Semel stepped down. The new CEO is in the position of convincing Wall Street he has what it takes to improve performance at Yahoo, and he took an aggressive stance in a press statement ahead of the company's quarterly conference call.

"I am focused on doing everything we need to do to strengthen our business, capture long-term growth opportunities and create increased value for our shareholders," Yang said, according to the statement. "By sharpening our focus, speeding execution, building our technology and talent, and investing in key growth areas, we can put Yahoo on a clear path to fulfill its potential as an Internet leader."

Yahoo also offered new, lowered guidance for its third quarter and year-end results. Wall Street expected $1.304 billion in revenue for the third quarter, but Yahoo said Tuesday that revenue would be in the range of $1.17 billion to 1.31 billion. Third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) are now expected to be in the range of $380 million to $450 million rather than the $521 million Wall Street is currently expecting.

For 2007, Yahoo is now expecting revenue of $4.89 billion to $5.19 billion rather than Wall Street's current guidance of $5.199 billion. EBITDA for 2007 is expected to be in the range of $1.775 billion to $1.955 billion rather than the current guidance of $2.063 billion, according to Yahoo.