Yahoo has disappointed with its second-quarter earnings, results that will only further fuel the debate over the internet company's future.

The results come just a day after Yahoo reached a settlement with activist investor Carl Icahn, who backed down from a proxy fight in exchange for seats on the board.

The company earned $131 million, or 9 cents per share, in the quarter, down 18 percent from $161 million, or 11 cents per share in the quarter a year earlier. Sales, when fees that are passed on to partner sites are excluded, rose to $1.35 billion. Both the profit and revenue numbers were below analysts' estimates.

Jerry Yang, the chief executive of Yahoo, was bullish in the company's earnings release.

"Yahoo is executing against its strategy, and we believe it's well positioned for long-term growth and maximizing stockholder value," he said.

But few others are as confident. 

Yahoo has yet to find a plan to unite its balkanized properties into a coherent whole and generate steady profit growth. At the same time it is still facing distractions from a frustratingly ambivalent suitor in Microsoft and Icahn himself. And talented employees have been elbowing each other to get out the door.

In the face of all this, Yahoo is clearly vulnerable to a slowdown in online ad spending. Investors were also disappointed by Google's earnings last Thursday. And Google is better positioned than Yahoo: In tough times, advertisers favor search ads over display ads—they are more likely to reach an interested consumer—and Yahoo has long relied more on display ads.

Ahead of today's earnings, Cowen & Co. cut its 2009 estimates for Yahoo's earnings per share by 2 cents, to 70 cents. Analyst Jim Friedland cited "near-term softness in the display market" and the likelihood that Yahoo's share of the search market will keep shrinking.

Youssef Squali at Jeffries, noting weak spending by financial and consumer advertisers, said the ambitious three-year plans for earnings growth Yahoo unveiled with such fanfare earlier this year could be "virtually unattainable."

So if Yahoo was ever going to deliver blowout earnings, the time to do so would have been now.

No dice.

With the latest disappointment, Icahn will be quietly, shrewdly biding his time, letting the rope spool out for chief executive Jerry Yang to hang himself with. If things go right, he's only a few moves away from a checkmate.

Shares of Yahoo fell in after-hours trading. If they continue to fall this week to below the $19-a-share price that prompted Microsoft's takeover offer in February, that would give Icahn leverage to agitate for a new C.E.O.—say, Jonathan Miller, the former AOL chief who is getting one of the new board seats.

At that point, Icahn would have much greater control over Yahoo. If he can't broker a deal with Microsoft, there are assets he can sell off: Stakes in Asian entities like Yahoo Japan and Alibaba.com, valued at more than $10 billion, would just be a start.

"The nomination by Icahn of Miller is significant in that he positions him as potentially the next Yahoo C.E.O. in case a deal with Microsoft is not reached and Yahoo fails to execute against its aggressive growth plans," Squali said. "This is an insurance policy for Icahn as Miller would get aggressive about extracting shareholder value through business dealings and assets spinoff."

Such a plan isn't without risk. It skirts the question of how Yahoo can regain some of its former glory. So employees may continue to bolt for the doors, while potential business partners and major advertisers may grow jittery, preferring to work with a company with less uncertain prospects. A company like Google.

But none of this matters to a corporate raider like Icahn. He may not get the complexities of Yahoo's business, but right now he doesn't need to. He just needs a way to sell off his shares at a profit.

For Yahoo, Yang, and his defenders, a happy outcome seems much more remote. It rests on a strong earnings performance.

Without that, Icahn may yet have his way without the bloody coup he once threatened.