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Yahoo has seen its quarterly profits fall 26% as it struggled to boost earnings from online advertising.

Net profits in the third quarter were $296m (£188m) compared with $396m during the same period last year.

Last month, Yahoo sacked chief executive Carol Bartz after its online earnings failed to keep pace with those of rivals Google and Facebook.

However, its performance beat market expectations, and its shares ended 3% higher.

Yahoo's net revenue in the three months to September was $1.07bn, compared with $1.12bn the year before.

Takeover talk

"My focus, and that of the whole company, is to move the business forward with new technology, partnerships, products and premium personalised content," said interim chief executive Tim Morse.

Yahoo has been looking for a new chief executive since firing Ms Bartz in September amid mounting frustration at failed efforts to turn the firm around.

Analysts say that in recent weeks there has been increasing speculation that Yahoo, or parts of its business, might be sold to an assortment of buyout firms.

There have been rumours that Microsoft is considering a second attempt at a takeover. Microsoft last offered to buy Yahoo for $47bn in 2008.

China's internet firm Alibaba has already said it might be interested in buying Yahoo.