Yahoo! Delivers a Mixed Picture

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

NEW YORK (TheStreet) -- Yahoo! (YHOO) 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) reported last week and is likely losing business to Google and Microsoft's (MSFT) Bing.