Yahoo! Delivers a Mixed Picture

(Updated from 1:06 a.m. EDT)

NEW YORK (TheStreet) -- Yahoo! (YHOO Quote) beat profit targets for the third quarter, but sales remain stubbornly flat despite rejuvenation efforts.

Yahoo! shares were at $17.96 in premarket trading Wednesday. The stock rose 5.1%, or 87 cents, to $18.04 in after-hours trading Tuesday after closing at $17.17.

The No. 2 Internet search shop posted adjusted earnings, excluding one-time items, of 13 cents a share, up from 9 cents in the year-ago period and well above the 7 cents analysts had targeted, according to Yahoo! Finance.

Sales less traffic acquisition costs for the quarter ended last month were $1.13 billion, down 14% from the $1.33 billion level last year, but in line with analysts' estimates calling for revenue of $1.12 billion.

"With new products like Yahoo! homepage, our brand revitalization campaign and expansion in the Middle East through Maktoob.com, our execution is improving and we're focused on what we do best -- being the center of people's online lives," CEO Carol Bartz said in a press release Tuesday.

In July, Yahoo!'s second-quarter sales disappointed with a 15% year-over-year decline, and Bartz warned then that there would be higher expenses as the company started "re-architecting and globalizing" to make its sites more open, scalable and mobile-friendly.

Yahoo! said weak sales were led lower by a 19% drop in search ad sales. Yahoo! wasn't seeing the upswing in search revenue that Google (GOOG Quote) reported last week and is likely losing business to Google and Microsoft's (MSFT Quote) Bing.