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Yahoo! lost $303 million in the fourth quarter. And Wall Street is chuffed.

For the quarter ending December 31, the online ad broker raked in revenues of $1.8bn, a one per cent drop from a year ago. And that translates to a net loss of 22 cents a share.

But if you ignore certain one-time charges - including severance packages tossed at departed Yahooligans and write-downs involving a few international assets - the profits suddenly appear. Thanks to a little accounting magic, you can argue that Yahoo! earned $238 million during the quarter, or 17 cents a share.

And that beats the gloomy estimates of the Wall Street guessmen. Following the release of Yahoo!'s Q4 numbers, company shares are up a half per cent in after-hours trading.

Eight days into her reign as the new Yahoo! CEO, Carol Bartz sees the silver lining. "You all know the weak global economic environment is impacting everyone, and of course, we were no exception," Bartz said during a conference call with reporters and analysts. "But despite the macro picture, there were some real bright spots."

Like Google, Yahoo! says that amidst the Meltdown, online advertisers are embracing search advertising at the expense of classic brand ads. "Large advertisers, across many vertical categories, are re-evaluating their marketing approach, spending less on brand advertising and directing more dollars into performance marketing," explained CFO Blake Jorgensen.

As a result, Jorgensen said, the company's worldwide search revenue grew 11 per cent, with the US market jumping 18 per cent. US queries leapt more than 10 per cent, and revenue per search was up "in the mid-single digits." This compared to the company's worldwide display revenue, which dipped 2 per cent, continuing a trend that dates back to Q3.

Nonetheless, it would appear that Yahoo! is still exploring the sale of its search biz to a certain company based in Redmond. After asking herself if she was dead set on selling her entire Yahoo!, Carol Bartz said "No. I'm here because I see a tremendous collection of assets and because I want to help make Yahoo! even stronger for our users, advertisers, employees, and shareholders."

But when she asked herself if she would "immediately" sell Yahoo!'s search business, she hedged. "I did not arrive here with pre-conceived notions about anything. I'm still learning about the business and our integrated search-and-display model. It is very easy from the outside to have a strong opinion about what Yahoo! should and shouldn't do - not just about the search business, but - I'm finding out - about everything."

That said, she claimed that search is "a very valuable part of our business. Understanding the intent and goals of our users as they seek information online is extremely useful to our franchise in many ways."

Later in the call, an analyst asked if Bartz could confirm press reports that she and other Yahoo! execs have recently met with Microsoft over a possible search deal. But she stayed mum. ®

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