Yahoo! (NASDAQ:YHOO)reported revenues of $1.575 billion for the quarter ended September 30, 2009, a decrease of 12%. Net income was $.13, compared to $.04 for the third quarter of 2008.

Marketing services revenue declined 12% and fees revenues declined 11%, compared to the third quarter of 2008. Marketing services revenue from “owned and operated” sites was $851 million, a 15% drop compared to $1 billion for the same period a year ago. The decrease was caused by a 19% decline in search advertising revenue and an 8% drop in display advertising revenue.

Yahoo! was able to sharply cut costs. Excluding a one-time restructuring charge, expenses were$758 million in the third quarter compared to $944 million in the same quarter last year.

Marketing services revenue from “affiliate sites” was $526 million, a 6% drop.

Yahoo! said that going forward revenue for the fourth quarter  is expected to be $1.6 billion to $1.7 billion.  Income from operations is expected to be in the range of $135 million to $155 million.

Cutting costs must not have impressed the market. Shares of Yahoo! were up 3% after hours to $17.68