SUNNYVALE, CALIFORNIA - Internet giant Yahoo saw second quarter profit nosedive 80% to $164 million (€131m; £89.7m), compared with $755m a year earlier. However, the decline is misleading because the year-ago results were boosted by the $563m sale of an investment in rival search engine Google.

Revenue rose 26% to $1.58 billion from $1.25bn a year earlier. Excluding commissions paid to marketing partners, Yahoo reported revenue of $1.12bn in line with its projection of $1.08bn to $1.16bn.

The company has disclosed that an upgrade to its search engine advertising system will be delayed until Q4 and that any financial benefit will not be felt until the first part of 2007.