Yahoo posts loss, revenue falls slightly

New CEO acknowledges company has 'work to do'

Yahoo Inc. announced today that it recorded a loss and that its revenue shrunk a bit in the fourth quarter of 2008.

The struggling Internet company's new CEO, Carol Bartz, appointed two weeks ago, acknowledged in a statement that Yahoo has "work to do," but she said that she's excited by the company's opportunities.

Yahoo did a good job of managing costs, made "important" investments, has "tremendous" momentum and innovation, and will emerge stronger when the advertising market recovers, she said.

Yahoo's revenue was $1.81 billion, which was 1% lower than its revenue in 2007's fourth quarter. Subtracting the commissions it pays to its ad network partners, Yahoo had revenue of $1.37 billion, down 2% but in line with the consensus estimate from analysts polled by Thomson Reuters.

Yahoo posted a net loss of $303 million, or 22 cents per share, compared to net income of $206 million, or 15 cents per share, in 2007's fourth quarter.

On a pro forma basis, which excludes certain items, net income was $238 million, or 17 cents per share, 4 cents per share above the analysts' consensus expectation.

The fourth-quarter results have generated particular interest because they are the first ones released since Bartz took over. Her comments during today's conference call will be closely followed by press and analysts, in case she discloses some of her concrete plans for the company.

Bartz replaced Jerry Yang, who announced his intention to step down in November after his tenure as CEO, begun in mid-2007, failed to turn around the company he founded. He stayed on as Chief Yahoo and as a board member.

Bartz was hired away from Autodesk Inc., where she was executive board chairman after serving as chairman, president and CEO for 14 years, until April 2006.

The day Bartz's appointment was announced, Yahoo President Sue Decker, who had been a candidate for the CEO position, resigned, saying she will leave after a transitional period. Decker worked at Yahoo for eight and a half years and was a close supporter of Yang.

Yang's tenure included an unsolicited acquisition attempt by Microsoft Corp., and critics blamed the failure of that deal on Yang and the Yahoo board. Later, a deal to let Google search ads run on Yahoo's Web site collapsed after it became clear the U.S. government planned to challenge it because of antitrust concerns. The deal would have given Yahoo's revenue a significant boost.

Yang's tenure as CEO also featured two big rounds of layoffs, an embarrassing exodus of high-profile managers, disappointing financial results, a tanking stock price, free-falling employee morale and little or no advances in key areas, such as search advertising and use of Yahoo's search tool.

Yahoo has been in crisis for several years, during which its financial performance has been generally disappointing and its technology strategy largely unfocused, allowing rivals big and small to take advantage of hot Internet opportunities while Yahoo reacted slowly, if at all.

Copyright © 2009 IDG Communications, Inc.

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