Yahoo Inc reported earnings after the market closed today for the second quarter ending June 30, 2010 (2Q).

Yahoo said its revenue in 2Q rose to $1.60 billion, a 2% increase from the 2Q of 2009

Yahoo’s net revenue, however was $1.13 billion, below the average analyst expectation of $1.16 billion.

Yahoo’s search business declined 8%year-over-year.  Analysts had been expecting search to be in the range of flat to down no more than 5%.

Yahoo said net income in the second quarter rose to $213.3 million, or 15 cents a share, from $141.4 million, or 10 cents a share in the year-earlier period.

Display advertising on Owned and Operated sites grew at  19% in 2Q 2010, compared to 2Q 2009.

Marketing services revenue from Affiliate sites were $557 million, a 7% increase.

Yahoo forecast a revenue range between $1.57 billion and $1.65 billion for the third quarter.

Yahoo said they expected traffic acquisition costs in the third quarter to range between 29% and 29.5% percent of revenue.

Shares of Yahoo stock are down over 7% or $1.00 a share on the news.