Yahoo's deals fail to boost revenue growth Yahoo's string of acquisitions and product overhauls did not return the struggling web portal to revenue growth in its second quarter, with total sales falling by 7 per cent to $1.2bn. Earnings per share, on the non-GAAP basis watched by analysts, increased by 19 per cent to $0.35, while revenue excluding costs of bringing in web traffic, another metric tracked closely by Wall Street, fell 1 per cent to $1.08bn, in line with estimates. However, Yahoo's guidance for revenue, before traffic costs, for the current third quarter of $1.06bn to $1.1bn was slightly below analysts" forecasts, and its shares fell by 1.3 per cent in after-hours trading. Marissa Mayer, who was appointed Yahoo's chief executive a year ago, said she was "encouraged" by what she called "continued stability" in the business. "This quarter drove tremendous improvements in our product line and our users responded with increased usage and engagement," Ms Mayer said in a statement. The launch of a new mobile app that includes technology acquired with Summly, the news app, and improvements to its mail, sports, news and photo-sharing sites did not yield an immediate improvement in Yahoo's display advertising revenues. Excluding payments to partners for traffic and other costs, display revenues fell by 11 per cent to $423m in the quarter compared with a year ago. A redesign of Yahoo search helped to increase the number of ads that users clicked on by 21 per cent. However, downward pressure on search ad pricing meant that search revenues, excluding traffic costs, grew just 5 per cent to $403m, slower than rival Google. According to industry analyst eMarketer, the overall US online advertising market grew by 14 per cent in the second quarter. Yahoo said that its net cash position stood at $4.8bn after completing a $3.65bn share buyback scheme using the proceeds from selling part of its stake in Alibaba, the Chinese commerce group. A further $1.9bn will be bought back over the coming months, as part of a previously authorised $5bn stock repurchase scheme dating back to last year. Product development costs increased by 18 per cent to $236m during the second quarter, while traffic acquisition costs more than halved to $64m. A $129m restructuring charge a year ago was not repeated, while other operating expenses remained broadly flat, helping to boost free cash flow by 40 per cent to $93m compared with the same quarter last year. Yahoo's share price has increased by more than two-thirds in the year since Ms Mayer took over as chief executive, its sixth leader in five years. Analysts say that investors have driven up the stock in response to growing expectations over the value of its remaining stake in Alibaba, which is expected to launch an initial public offering that could value it at up to $100bn. Despite an improvement to Yahoo's reputation in its native Silicon Valley, many on Wall Street are yet to be convinced that growth can return to Yahoo's core businesses. Ms Mayer has said a turnround could take three years.