Revenue down, profits up in Yahoo's Q4

Yahoo's CEO called the results "encouraging"

Yahoo's revenue fell but profits grew in its fourth quarter, results which the company described as "encouraging" and as fueling a turnaround momentum.

Revenue came in at US$1.525 billion in the quarter, ended Dec. 31, 2010, down 12 percent year-on-year. Subtracting the commissions and fees Yahoo pays to advertising partners, revenue was $1.205 billion, down 4 percent but slightly topping the consensus expectation of $1.19 billion from analysts polled by Thomson Financial.

Net income grew 104 percent to $312 million, or $0.24 per share. On a pro forma basis, which excludes certain items, net income was $340.5 million, or $0.26 per share, 4 cents above analysts' consensus expectation.

During the fourth quarter, Yahoo continued to do well in its specialty, display advertising, but still struggled in search advertising, the most popular online ad format, which rival Google dominates. Yahoo's gross display ad revenue rose 14 percent to $635 million, while search ad revenue fell 27 percent to $640 million.

"We just completed a very encouraging quarter and year for Yahoo, where we saw our plans to turn around the company gain momentum," said Carol Bartz, Yahoo CEO, in a statement.

Prior to reporting its fourth quarter earnings, Yahoo announced it is cutting 1 percent of its global staff, or about 140 employees. Yahoo laid off 600 people, or about 4 percent of its global staff at the time, in December.

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