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Yahoo! wows Wall Street with revenue drop

Only 4% down. Well done

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Yahoo!'s revenues took another fall during the fourth quarter - that's the fifth tumble in a row - but they didn't fall quite as much as expected.

The beleaguered web portal reported revenues of $1.73bn during Q4, a 4 per cent drop from a year ago. But that's up 10 per cent from Q3, and it beat the expectations of both the Wall Street guessmen and the company itself.

Yahoo!'s Q4 "guidance" had predicted revenues no higher than $1.7bn, and if you subtract traffic-acquisition costs, adjusted fourth-quarter revenues came in at $1.26bn, besting the $1.23bn predication from all those Wall Street analysts.

"The fourth quarter marked a strong finish for 2009, which was a transformative year for Yahoo!," CEO Carol Bartz said in a canned statement. She also pointed out that the company's search revenue grew sequentially for the first time since Q3 2008, and she said that demand for display ads has "improved significantly."

Nonetheless, Yahoo!'s quarter contrasts starkly with that of onetime arch-rival Google. Earlier this week, the Mountain View Chocolate Factory reported a 17 per cent leap in revenues over the previous year, as the economy continues to rebound from the depths of the middle of last year.

Despite its revenue drop, Yahoo! managed $153m in profits, compared to a $303m loss a year ago. That's what some post-Jerry Yang belt-tightening can do for you. Bartz replaced Yang as CEO in January 2009.

During Bartz's first year, Yahoo! took in $6.5bn in revenue, a 10 per cent drop from the previous year. But 2009 profits reached $598m, a 43 per cent increase. Belt-tightening indeed. ®

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