Yahoo!

(YHOO)

beat diminished earnings expectations on slightly lower than anticipated sales for the fourth quarter -- and the first report for new CEO Carol Bartz.

The Sunnyvale, Calif., Internet giant posted a net loss of $303 million or 22 cents a share, much steeper than the $206 million loss in the year-ago period. Excluding one-time items, Yahoo! posted a profit of $184 million or 17 cents a share, up from the 15 cent adjusted profit last year, and well above the 13 cents analysts were looking for.

Sales for the December quarter were $1.8 billion down slightly from the $1.83 billion tally a year ago. Revenue excluding traffic acquisition costs, was $1.37 billion, down from $1.4 billion in the year-ago period.

"Despite the challenging economic environment, Yahoo! delivered adjusted operating cash flow above the midpoint of guidance for the fourth quarter," said Bartz in a press release. "The company also made important investments while aggressively managing costs, leaving us better positioned to weather the economic downturn and emerge stronger when advertiser spending improves," Bartz added.

Yahoo! rival

Google

(GOOG) - Get Report

delivered solid results last week under the sort of difficult conditions that have wounded even tech stalwarts like

Microsoft

(MSFT) - Get Report

and

Texas Instruments

(TXN) - Get Report

. Yahoo has been trying to trim costs in recent months through job cuts and salary freezes.

Meanwhile, CEO Bartz, who left

Autodesk

(ADSK) - Get Report

to lead Yahoo for a $19 million pay package, has some more work ahead. Among the first items on the agenda is a possible Net search ad deal with Microsoft.

Yahoo shares, which closed up 17 cents at $11.34, rose 3% to $11.72 in after-hours trading Tuesday.