Yahoo's profit for the first quarter of 2007 fell 11% to $142,4-million, compared to net income of $159,9-million in the same period last year.
Meanwhile, revenue for the period rose 7% to $1,67-billion, or $1,18-billion after commission.
Yahoo is still lagging market share behind main rival Google, but hopes to catch up thanks to the recent launch of Panama, a new marketing platform that is expected to improve advertisement distribution and increase click-through rates.
The company also received a boost last week when it concluded a deal with Viacom, to sell advertising for the publishing group's 264 US-based newspapers.
And yesterday, it signed up a new partnership with PayPal, an online payment service, which should help counter Google's own "Checkout" payment service.