Yahoo! pinched its pennies to eke out a better-than-expected quarter.

The Internet portal, which dumped CEO Carol Bartz last month and said it would explore its strategic options, continued to lose ground in display-advertising revenue, an area it once dominated.

Nonetheless, it grew profits to 21 cents a share.

The forecast was for 17 cents, and the beat was enough to send the stock higher, to more than $16 a share in after-hours trading, a level it hadn’t traded at since last spring.

Still, Yahoo! disappointed with its core Internet display advertising business, which was down 2 percent year-over-year to $502 million in the third quarter. Wall Street had expected display to grow.

“[Morse] can squeeze a couple extra pennies out if nobody spends anything, but it’s not about squeezing a couple extra pennies,” said Colin Gillis, an analyst with BGC Partners. “People want to see revenue stop shrinking and start to grow.”

Revenue minus traffic acquisition costs was $1.07 million, in line with Street estimates and down 5 percent from last year’s third quarter. Earnings were down 26 percent to $293 million.

The drop in display advertising was masked by Yahoo’s search-ad revenue, which topped expectations.

The company has partnered with Microsoft to power its search business.

Yahoo! was promised a minimum payment from Microsoft quarterly through the end of the year — and yesterday that deal was extended through 2013.

As the company struggles to maintain its relevance in the changing Web landscape — under assault from Facebook and Google — it has scrambled to shore up its advertisers and reportedly has been slashing prices on its premium Internet real estate.

Yahoo! is considering a sale of all or parts of the company, and a number of possible suitors have emerged.

Private-equity firms and big-name investors, such as Silver Lake, Providence Equity Partners, KKR, Yuri Milner’s Digital Sky Technologies and others, are reportedly sizing up Yahoo!