He said business results were mixed, with some segments doing well, like U.S. search advertising, while others did not, like U.S. branded display ads and the general performance of the company in Europe and Asia.

Although revenue was disappointing, Yang pointed out that operating cash flow came in "above the midpoint" of Yahoo's outlook range, thanks to cost management measures this year.

While the revenue forecast was cut due to the "uncertain advertising environment" Yahoo faces, the company is reaffirming its operating cash flow outlook for the year.

"Continued substantial cash flow remains one of our core financial strategies and an important goal," Yang said. "We have the balance sheet strength, liquidity and free cash flow we need to continue to make progress in our core strategies as we work our way through this economic downturn."

Yang also said he was satisfied with the traffic and the audience engagement generated by Yahoo Web sites and on-line services during the quarter.