The company reported a net loss of $48.5m (£34.5m), compared with a profit of $53.3m (£37.9m) in the same period a year earlier.
Net revenue was $182.2m (£129.5m), compared with $272.9m (£194m) the year before. Analysts had predicted $175.1m (£124.4m), according to Thomson Financial/First Call.
However, the company's third-quarter predictions were below analysts' forecasts. The company said it expected to break even, excluding special items, on revenue of $160m-$180m (£113.7m-£128m). Analysts had expected to earn one cent per share on revenue of $184.5m (£131.1m).
Analysts noted that, although the second-quarter revenues beat expectations, Yahoo! had already lowered its forecasts for the quarter twice and the company did not expect a rebound in the ad market until the middle of next year.
Yahoo! said that, in response to the decline in the ad market, it is moving away from an advertising-based business model and towards more fee-based services aimed at businesses and consumers.
In separate news, the company announced the appointment of Mark Opzoomer as managing director and vice-president of Yahoo! Europe. It also appointed Allan Kwan as vice-president and managing director of Yahoo!'s North Asia operations, and SI Lee has head of Yahoo! Korea's business operations.