Many problems caused by delayed advertising system

A little humility is doing Yahoo! some good.

Shares in the dot-com giant were up 3% in after-hours trading Tuesday following an earnings report in which net income plunged 37% and revenue growth, while still a healthy 19%, slowed from previous quarters.

News comes in the midst of a disappointing year for Yahoo! earningswise that has seen its stock drop 38%. In a statement at the beginning of the earnings announcement, CEO Terry Semel pronounced the company was “not satisfied with our third-quarter financial performance.

“We continued to grow and believe that we outperformed the graphical market but not at a rate that met our expectations,” he added.

Many of its problems have been caused by a delayed advertising system called Project Panama that is expected to finally roll out in the U.S. this quarter and in foreign markets early next year.

Net income for the quarter was $159 million on $1.58 billion in revenue. Netco continues to see its biggest growth overseas, where revenue rose 29% compared with 14% in the U.S.

Looking to help its flagging stock price, Netco also announced a stock repurchase program Tuesday. It plans to spend up to $3 billion buying back shares over the next five years.

Though Yahoo! remains the most popular Web destination in many of its categories, its growth rates are significantly lower than some of its fast-growing competitors such as Google and News Corp.’s MySpace.

For the current quarter, company expects revenue — excluding the costs it pays to affiliates — to rise slightly from $1.121 billion to between $1.145 billion and $1.265 billion.

Before earnings were announced Tuesday, Yahoo! shares were down a fraction at $24.15.

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