Sunnyvale (CA) – Yahoo reported slightly lower profits on higher revenues today after the close of trading. For the 2nd quarter, the search engine and portal giant had $1.7 billion in revenue which is 8% higher than the same quarter in 2006. Operating income dipped to $161 million which is $3 million lower than last year.

During a conference call, Yahoo executives talked about lower revenues from display advertising which will hold yearly revenues to between $4.9 and 5.19 billion dollars.

Yahoo has been facing increasing pressure both from competitors Google and Microsoft, but from stockholders. You may remember that CEO Terry Semel was ousted in late June for lackluster performance. Semel, who is still the Chairman, was also highly criticized for his $107 million dollar paycheck which many stockholders considered excessive. Co-founder Jerry Yang replaced Semel as CEO.

According to figures from market research company comScore, Yahoo’s search engine market share dropped in June to 25.1% from 26.4%. A big part of that drop was the huge increase in Microsoft Live Search traffic.