The once iconic Internet company caught analysts, investors and industry watchers by surprise Monday when it announced that it had poached Mayer from Google Inc (GOOG.O) to be its next CEO. Many had assumed that after a stellar run as interim-CEO that Levinsohn would be named to the position on a permanent basis simultaneous with its earnings announcement.

"Since this is Marissa's first day on the job she will not be joining us on the call. However, she is very mindful of the importance of the investor community and I'm sure that you'll be hearing from her soon," said Yahoo Chief Financial Officer Tim Morse, who led the call solo for the company.

Mayer's first day at Yahoo coincided with its reporting of flat net revenue and a slight decline in profit during the second quarter.

Shares of Yahoo were down 3 cents at $15.57 in after-hours trading on Tuesday.

Yahoo's revenue has "basically been flatlined for a while," said Macquarie Research analyst Ben Schachter.

"Flat is not where bulls want it to go, but it's not falling off a cliff either."

Some observers have speculated that the surprise hiring of Mayer signals Yahoo's intention to renew its focus on Web technology and products rather than beefing up online content.

Yahoo's Morse provided few details about the company's future strategy or plans, noting that the company's direction "does remain to be seen" in light of the new CEO.

THE ROSS QUESTION

The latest management shuffle at Yahoo raised questions about the future of Levinsohn, who has played a key role revamping Yahoo's media and sales operations.

Whether Levinsohn remains at Yahoo "depends on the chemistry" between him and Mayer and on the commitment the company is willing to make to media, said one source close to Levinsohn.

"In the ideal world you'd be able to keep him around to help improve the overall media offering," said Nomura Securities analyst Brian Nowak.

"If he does leave, it does leave a void that they have to fill on the media side," Nowak said.

Some industry insiders believe the arrival of Mayer could help recruiting efforts at Yahoo, which in recent years has not been considered the most desirable destination among Silicon Valley's engineers and product managers.

Google's first female engineer, Mayer helped develop Google Search and oversaw some of Google's key products, including Google News and Gmail during her 13-year tenure at the search company.

Some former colleagues who have worked with Mayer noted that her "intense" personality can make her "rough around the edges" and difficult to deal with, but they also noted Mayer's commitment to mentoring co-workers through a special program that she spearheaded at Google.

The 37-year-old, who has never been a CEO before, will face a formidable challenge in trying to revive Yahoo's fortunes.

Yahoo remains one of the world's most popular websites, with more than 700 million monthly visitors, according to the company. But the company has seen its revenue growth stall, amid an industry-wide decline in online display advertising prices and competition from Facebook Inc (FB.O) and Google.

Visitors to Yahoo-branded websites increased 2 percent year-on-year during the second quarter, Yahoo said. But queries on Yahoo's U.S. core search websites declined 17 percent during the second quarter, the number of minutes visitors spent on its media properties fell 10 percent.

NO GUIDANCE

Yahoo's net revenue, which excludes fees paid to partner websites, was $1.081 billion in the three months ended June 30, compared to $1.076 billion at this time last year.

Analysts polled by Thomson Reuters I/B/E/S were looking for net revenue of $1.096 billion.

Mayer's hiring caps a tumultuous year at Yahoo. In May, Scott Thompson resigned as CEO after less than six months on the job as a controversy flared up over his academic credentials.

Thompson replaced the outspoken and occasionally foul-mouthed Carol Bartz, who was fired in September after failing to revitalize Yahoo.

Morse said on the call that Yahoo wanted to give Mayer "time to get acclimated" with the company before providing forward guidance for the remainder of the year.

Yahoo's second-quarter net income was $226.6 million, or 18 cents a share, down slightly from roughly $237 million, or 18 cents a share, in the year ago period.

Excluding certain items, Yahoo said it earned 27 cents a share, above the 22 cents a share expected by analysts.

Yahoo said its revenue from online display ads increased 2 percent year-on-year to $535 million, while its search revenue decreased 1 percent to $461 million.

"Until you can somehow get more clarity on how they're going to improve these user trends and the monetization behind them, it's hard to get more positive on the business," said Nomura's Nowak.

(Reporting By Alexei Oreskovic; Editing by Bernard Orr and Peter Lauria)

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