Yahoo's fourth-quarter results beat Wall Street's low expectations, thanks to a series of cost cuts in a weak advertising market, sending its shares up 5 per cent in a relief rally last night.
However, Yahoo gave first-quarter forecasts for operating income that were well below Street estimates and refrained from giving its usual full-year outlook, which disappointed some analysts and underscored the uncertainties the company faces.
"They didn't bleed to death as much as some of the bear scenarios" had predicted, said Martin Pyykkonen, an analyst at Wunderlich Securities.
"It's certainly not good results and not a good outlook, but relative to the kind of general fears in the market, I wouldn't say it was any worse," he added.
Yahoo, the leading provider of online display advertising, has been under pressure for nearly a year as it held fruitless merger or partnership talks with Microsoft, Google and Time Warner's AOL.
During that time, Yahoo lost market share in search advertising, while display ad sales have been badly hit industry wide by the US recession. Yahoo shares have plunged 60 per cent from a 12-month high of $30.25, after Microsoft made an unsolicited bid for the Silicon Valley company last February.
The stock rose 5.4 per cent to $11.95 in after-hours trading following the results, from their Nasdaq close of $11.34.
Fourth-quarter profit, excluding write-downs and one-time charges associated with Yahoo's restructuring efforts, rose to $238 million, or 17 cents per share, from $205.7 million, or 15 cents per share, a year earlier.
That beat the analysts' average forecast for 13 cents per share, according to Reuters Estimates.
But including the write-downs and charges, Yahoo posted a net loss of $303 million, or 22 cents per share.
Gross revenue, including payments to affiliated websites that carry Yahoo ads, fell 1 percent to $1.81 billion. Net revenue was $1.375 billion, in line with the average Wall Street forecast of $1.371 billion.
Carol Bartz replaced Yahoo co-founder Jerry Yang as chief executive earlier this month. Yang, who had been CEO for 18 months, was seen by investors as the main impediment to a Microsoft deal and many hoped Bartz's appointment could restart talks.
On her first earnings conference call with Yahoo analysts, Bartz said she didn't join Yahoo to sell the company, nor did she have a preconceived notion of doing a search deal, but that "everything is on the table." Microsoft has said it no longer wants all of Yahoo, but would still pursue a search-only deal.
Reuters