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The company is not changing its overall financial predictions for the year, despite the setbacks, which saw net income fall from over $160 million for the second quarter in 2007 to $131 million this year.

"We are pretty pleased, relative to both the distractions and the economy," says chief financial officer Blake Jorgensen. Net revenue rose by 8%, but this was slightly below investor's expectations.

Despite many shareholders calling for

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a change in management structure over the way that Yahoo handled Microsoft's proposal for a takeover, chief executive Jerry Yang has announced he is committed to staying at the helm of the company.

Earlier this week the rogue investor Carl Icahn won a place on the board of the company, along with two colleagues. However, under the terms of the new deal all members of the board - including Yang - will have to stand for re-election in August.

"Carl is a very smart guy. He is clearly one of the best negotiators out there," said Yang, adding that the appointments helped to avoid a "petty public fight".

The Yahoo founder also explained that although Microsoft's takeover bid fell through, the company remains interested in any new options.

"We have looked at just about every alternative you could imagine as far as looking at how do we best position the company to go forward either through transactions and/or financial options," he said in a conference call.