Verizon Communications Inc and AT&T Inc are said to be in the running to acquire the core business, along with private equity firm TPG Capital and a consortium led by Quicken Loans founder Dan Gilbert and backed by billionaire Warren Buffett.

Although total revenue rose to $1.31 billion from $1.24 billion a year earlier, the seeming improvement was the result of a change in the way the cost of acquiring traffic is counted.

After deducting fees paid to partner websites for traffic, revenue fell to $841.2m from $1.04 billion.

Estimating that Tumblr is worth "nothing" at this point, Ross Gerber, cofounder and CEO of Gerber Kawasaki Wealth and Investment Management, said potential buyers were likely bidding lower than Yahoo believes it is worth.

"I can't imagine why the sale process is taking so long, the only thing I can think of is it's being overpriced.

This report doesn't further create an impression that paying up for these assets has any value," Gerber said.

Revenue in the company's emerging businesses, which Chief Executive Officer Marissa Mayer calls Mavens - mobile, video, native and social advertising - showed some life, rising 25.7pc to 4m in the second quarter ended June 30.But the improvement in Mavens was offset by decreases in gross search revenue that is only expected to get worse, said B. Gross search revenue for the quarter was 5m, down 17pc from the same period last year."This is supposed to be the growth engine of the company, and at best it was up slightly year over year.Yahoo reported adjusted earnings of 9c per share, short of the 10c that analysts expected.It also announced a 2m write-down on the value of Tumblr, the social media service that it acquired in 2013 for .1 billion.Yahoo is in the process of auctioning off its search and advertising business, and is expected to choose a winner this week.The company said its board has made "great progress on strategic alternatives" but did not comment further on the auction process.