Yahoo! Inc. (NASDAQ: YHOO) reported fiscal second quarter 2014 results after markets closed Tuesday afternoon. The Internet portal company reported quarterly adjusted diluted earnings per share (EPS) of $0.37 on revenue of $1.04 billion. In the same period a year ago, Yahoo reported EPS of $0.35 on revenue of $1.07 billion. Second-quarter results compare to the consensus estimates for EPS of $0.38 on revenue of $1.08 billion. Revenues are calculated excluding traffic acquisition costs (ex-TAC).

Perhaps the big news in the earnings report is that Yahoo and Alibaba have amended a share repurchase agreement that reduces the number of shares Yahoo is required to sell in Alibaba’s initial public offering from 208 million to 140 million. Yahoo’s CFO said, “We would like to take this opportunity to let our investors know that we are committed to return at least half of the after-tax IPO proceeds to shareholders….” That will make shareholders happy.

The momentum that Yahoo felt at the end of the first quarter evaporated in the second quarter. Display revenues ex-TAC, Yahoo’s bread and butter, fell 7% from $432 million in the year-ago quarter to $394 million. The company sold 24% more ads, but the price per ad fell by 24% compared with the second quarter of 2013.

Yahoo’s CEO Marissa Mayer said:

Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results. While several areas showed strength, their growth was offset by declines. Yahoo Search, for example, had a strong quarter, growing 6% year-over-year on a revenue ex-TAC basis and 19% year-over-year in search click-driven revenue. Our social, mobile, video and native areas also grew with significant momentum, collectively gaining nearly 90% year-over-year. However, display remains an area of investment and transition.

Search revenue rose 6% on an ex-TAC basis year-over-year from $403 million to $428 million. Paid clicks were up about 3%; and price-per-click was up about 15%.

The company repurchased $721 million worth of its own stock in the quarter, about 60% more than Yahoo repurchased in the first quarter.

Shares are up about 1% in after-hours trading Tuesday, at $36.09 in a 52-week range of $26.73 to $41.72. Thomson Reuters had a consensus analyst price target of around $41.10 before today’s results were announced.

 ALSO READ: Yahoo! Falls Behind Microsoft in Digital Advertising Revenue

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