UPDATE 3-Yahoo beats Wall St forecasts, dulling criticisms

(Recasts, adds analyst comments, other details)

By Eric Auchard and Michele Gershberg

SAN FRANCISCO, Oct 16 (Reuters) - Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) posted quarterly results showing a rebound in brand advertising and beating Wall Street forecasts, and gave a more optimistic outlook that drove up its shares nearly 10 percent on Tuesday.

Net profit for the third quarter was slightly lower than the same quarter a year earlier but revenue far exceeded Wall Street's muted expectations.

The results buy more time for Yahoo's recently elevated management team to demonstrate progress in the face of harsh criticism calling for it to slash poorly performing business or sell the company outright.

"Yahoo is clawing its way back," Jeffries & Co analyst Youssef Squali said of the results. He recommends investors buy the stock, which he says could reach $34 over time.

Shares of Yahoo closed down 4.2 percent at $26.69 on Nasdaq. But they jumped 9.3 percent following the report to trade at $29.18 in after-hours action.

Gross revenue rose 12 percent to $1.77 billion. Excluding payments to advertising partners, revenue rose 14 percent. Sales on its own site grew 24 percent, powering results, while efforts by the company to curtail low-quality ads among network affiliates hurt revenue growth on non-Yahoo properties.

"It looks like they've beaten expectations but not by very much," said Sanford C. Bernstein analyst Jeffrey Lindsay. "Really, it's still only 12 to 14 percent growth, which sounds good, but for an Internet company is really quite poor."