Yahoo! Falls on Revenue Decline, Layoffs

Yahoo! story updated to include comments from CEO Carol Bartz

NEW YORK ( TheStreet) -- Yahoo!'s ( YHOO) fourth-quarter earnings beat analyst expectations, but revenue declined over last year, pushing the stock down 3.4% in after-hours trading.

Yahoo! posted earnings of 24 cents per share, above analyst estimates of 22 cents per share and ahead of last year's earnings of 11 cents per share.
Yahoo

The Sunnyvale, Calif. company generated revenue of $1.21 billion, excluding traffic acquisition costs, down 4% year-over-year. Analysts had expected revenue of $1.19 billion.

Display advertising, an area in which Yahoo! is fending off a growing threat from Facebook, increased 16% over the same period last year.

CEO Carol Bartz addressed competition in the display ad business during a conference call with analysts, saying that the way advertisers "paint their story" on the social networking giant differs from their approach on Yahoo!

"There's room for everyone here," she said. "We're serving different parts of the Internet value chain."

Search revenue fell 18% year-over-year. In 2009, Yahoo! teamed up Microsoft ( MSFT) to compete with market leader Google ( GOOG) in the search space. Google currently holds 67% of the U.S. search market, compared with a 28% combined share from Microsoft and Yahoo!

Yahoo! said it expects first-quarter 2011 revenue excluding traffic acquisition costs to come in between $1.02 billion and $1.08 billion, below Wall Street's consensus estimate of $1.13 billion.

Bartz called the quarter "very encouraging."

Bartz was hired two years ago to turn around Yahoo! after several years of sluggish growth. She has focused primarily on cutting costs through layoffs and shutting down non-core businesses like search site AltaVista.

Cost cutting under Bartz continued Tuesday, with the company announcing it had laid off 1% of its workforce. Yahoo! cut 600 employees, or around 4% of its workforce, in December.

--Written by Olivia Oran in New York.

>To follow the writer on Twitter, go to http://twitter.com/Ozoran.

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