Yahoo Inc , which last week announced a Web search deal with Microsoft Corp , will invest money from reduced marketing and infrastructure costs into its display ad, content and mobile services technology, its chief executive Carol Bartz told the New York Times in an interview.

Bartz told the paper she went ahead with the search deal as Yahoo found it difficult to match the level of investment that Google Inc and Microsoft were making in the search business.

My first reaction when I got here was that I wouldn't even do a search deal, Bartz told the paper, until I looked at our expense structure and our actual options and looked at what our prime job was, which is to grow audience.

Bartz told the paper that the core of the company was intact. We haven't eviscerated the company.

Yahoo and Microsoft signed a 10-year pact last week under which Microsoft will power search queries on Yahoo's sites and Yahoo's sales force will be responsible for selling premium search ads to big buyers for both companies.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Valerie Lee)

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