The California-based company also returning a 13% share value decrease following yesterday's announcement.
said its planned enhanced search facility software would allow advertisers to target consumers with greater accuracy by analysing the words they use in the search engine, but plans to develop it are now likely to be put on hold until the fourth quarter.
Net revenues for Yahoo! rose by 28% to $1.1bn, but the figure was slightly below expectations, and although a third-quarter increase to $1.2bn is being predicted, it is far less than analysts would have hoped.
Terry Semel, chief executive at Yahoo!, said: "To meet the standards that we believe our clients should expect from us, we think it is prudent to add some extra time to our original estimates for the commercial launch.
"We now expect to rollout the front end or advertising management application in the fourth quarter rather than the third quarter."
In June, the company said it had agreed a partnership with eBay to further expand the companies' clout against Google and Microsoft, by allowing consumers to contact advertisers directly for their products and services.
Yahoo! has also unveiled an internet TV facility, allowing subscribers to access aggregated content from ABC News and CBS's '60 Minutes'.
However, despite the profit fall, Yahoo! appears to be retaining its popularity with internet users, with Nielsen//NetRatings reporting the number of visits to Yahoo!'s online properties site rising 9% in the second quarter year on year to nearly 106m monthly visitors in the US.
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