SUNNYVALE, California: Yahoo, the online giant, more than tripled its profits in the last quarter, and has also argued that the internet advertising market is beginning to show signs of "stabilisation".

During the third quarter of this year, Yahoo posted net profits of $186.1 million (€124m; £113m), up from $54m in the same period in 2008, with gross revenues of $1.58bn, down 12% on an annual basis.

Carol Bartz, the company's ceo, said in a statement that the "solid third quarter that signals our major businesses have stabilised."

Speaking on a conference call, the Sunnyvale-based firm's chief financial officer, Tim Morse, added that "ad spending is starting to free up, and we are a great value proposition for advertisers."

"Overall, the theme for third quarter was stabilisation as we saw strength in key areas of our business after two straight quarters of deceleration."

The company reported that display advertising on its own portals, including its homepage, was relatively resilient, with total revenues falling 2% quarter-on-quarter, and 8% year-on-year, marking a deceleration in the slowdown on both of these measures.

Its search revenues declined by a more substantial 19%, suggesting it is falling further behind Google, which reported impressive results last week.

In an effort to redress this trend, Yahoo has forged a partnership with Microsoft, an alliance which has recently gained the backing of the major advertising holding groups – WPP, Omnicom, Publicis and Interpublic – as the two firms seek regulatory approval.

Morse argued that, with regard to search, "the next revolution isn't with the algorithms that provide results, it's in creating a better, more personally relevant search experience."

"This is where we'll differentiate ourselves and compete vigorously without the billions required to keep up in the arms race that generating search results has become."

Yahoo has cut 2,000 jobs during the course of the last year, and also sold its share of, the Chinese web operator, for $98m in Q3, helping boost its financial performance during this period.

Data sourced from Business Week/Seeking Alpha; additional content by Warc staff