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Yahoo! president Sue Decker believes her company is "moving from catch-up mode to a mode of true differentiation." But its fourth quarter profits were down 23 per cent, and it will soon axe seven per cent of its work force.

This afternoon, during a conference call for the benefit of industry analysts and reporters, Decker and Co. announced Q4 2007 net profits of $205.7m, down from $268.7m in Q4 2006. Then they said their "outlook contemplates a workforce realignment of approximately 1000 people". That means layoffs. These will come in mid-February, and thanks to these layoffs, the company will eat between $20m and $25m. Or so it says.

But fourth quarter revenue was up eight per cent, jumping from $1.7bn in 2006 to $1.83bn, and the Yahooligans have high hopes for the future. "In October, we outlined our strategy to achieve a significant multi-year transformation of Yahoo!'s business in order to capture the large and growing market opportunity that we see ahead for the internet," said CEO Jerry Yang. "We're making good progress executing on this strategy, and I'm confident we're headed in the right direction."

Yang argued that the Yahoo!'s "core business areas" grew faster in the second half of 2007 than the first half, with marketing revenue from Yahoo! owned and operated sites growing 20 per cent from a year ago. And he was pleased to announce that the company has renewed its partnership with mega ISP AT&T.

"We have expanded our relationship with AT&T to be their ad platform partner in search and display for their portal and mobile platforms," he said.

What does he think of the layoffs? He calls them "a necessary next step in our transformation." "Rather than across the board cuts," Yang said, "we will make targeted reduction alongside targeted investments, planning to eliminate redundancies in bureaucracy and redeploy talent." ®

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