It's come to this: We expect so little from Yahoo that when the news is bad but not terrible, it's a feel-good moment.

Yahoo's second-quarter profit of 10 cents a share was 2 cents below what Wall Street was expecting. It's the company's smallest profit in five quarters, and yet the stock was up 2.5 percent in after-hours trading Tuesday.

This was neither the blowout quarter that Yahoo needed nor the train wreck some had feared. Yahoo also didn't alter its already conservative estimates for full-year earnings.

"Normally, this would be a poor performance," said Jeffrey Lindsay, an analyst at Sanford Bernstein. "The market is saying mediocre is good enough. It's as if a patient had been flatlining, and the doctors get the heart going again. He's certainly not healthy, but it could be worse."

Yahoo posted gross revenue of $1.8 billion in the quarter through June 30, up 6 percent from the same quarter a year earlier. Net revenue, excluding marketing commissions and fees, grew 8 percent year on year to $1.35 billion but was the lowest figure in three quarters. It was also slightly below the consensus estimate of $1.37 billion in net revenue.

Any way you slice it, that's dramatically slower revenue growth than archrival Google is seeing. Last week, Google said revenue grew 39 percent in the quarter.

And so Yahoo exits the second quarter short of financial ammunition to fight off shareholder agitation from Icahn and the new board members who are likely to side with him. Any further weakness in its stock during the coming months could also reignite a flame in its spurned suitor, Microsoft.

"The distractions aren't going away," said Martin Pyykkonen, an analyst at Global Crown Capital. "If people think Microsoft is gone for good, that Icahn is going to be quiet, and that it's going to be business as usual, they might think again."

Yahoo C.F.O. Blake Jorgensen said operating profit was hurt by $22 million in fees for outside advisers in its takeover battle with Microsoft, proxy fight with Carl Icahn, and shareholder lawsuits that have been filed.

As a result, Yahoo only made $101 million in the quarter at the operating level, down 45 percent year on year and even well below the guidance of between $135 million and $155 million. That gave it an operating margin of 7.5 percent, half of what it was a year ago. Factoring out the $22 million in fees, however, the operating margin is still a historically low 9.2 percent.

Meanwhile, Yahoo needs to grapple with a slowing market for online ads. Executives said in a conference call that it's seeing weakness among advertisers in the finance and travel sectors, although spending from technology and entertainment industries remains strong.

"We are seeing some pricing pressure similar to what other companies have described," notably in premium display ads, said Yahoo president Sue Decker.

Abroad, Yahoo is seeing stronger growth: Net revenues outside the U.S. grew 14 percent in the quarter, versus 6 percent growth at home. Still, overseas revenue makes up a little more than a quarter of Yahoo's revenue, while it's more than half of Google's.

Yahoo is maintaining its forecast for the full year. The midpoint of its estimated range of gross revenue is $7.6 billion, unchanged from its previous guidance. That would mean a 9 percent growth rate for all of 2008.

Pyykkonen pointed out a dilemma Yahoo investors are facing. As an independent company, Yahoo should be valued around $17 a share, he said. But expectations that Microsoft may still come back and pay up to $30 a share is keeping the stock hovering in the low $20s.

It's as if there are two stocks sharing the same YHOO ticker. One of them is an underperforming stand-alone. The other is a future Microsoft subsidiary. Only one of them is real. But these days, neither one is looking particularly promising.