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Yahoo!'s net income plunged in the December quarter to $269m, compared with $683m net recorded in the same Q the previous year.

Increased stock compensation expenses are to blame for some of the shortfall. The internet giant booked $56m of stock-based compensation expense in Q4 '06, against $11m the previous year. 2005's Q4 results were also pumped up somewhat by $188m of net gains in sales of investments.

Revenues advanced 13 per cent to $1.702bn (Q4 05: $1.5bn), with advertising revenue also up 13 per cent to $1.49bn (Q4 05: $1.315bn) and fees revenue up 15 per cent to $213m ($186m). Revenues without traffic acquisition costs (i.e. the money paid to Overture search advertising affiliates) was $1.012bn.

So all in all, if it weren't for the stellar performance of Google, its Silicon Valley neighbor, Yahoo! would not be seen to be doing too badly. But that is a big if: Google is runaway leader. And Yahoo! will have to pedal - peddle - hard to make sure that the lead doesn't increase. The company today said it should get Panama, its next gen advertising platform, into production on 5 February.

Yahoo! forecasts net revenue of $1.12bn- $1.23bn for Q1 '07 and full year sales of $4.95bn to $5.45bn.

Yahoo! earnings release is here. ®

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