By Jessica E. Vascellaro
The Wall Street Journal
Yahoo Inc. swung to a loss and warned that the bleak advertising market will continue to hurt sales, intensifying the pressure on new Chief Executive Carol Bartz to turn around the Internet giant.
In her first earnings conference call, Ms. Bartz said she didn't join Yahoo to simply sell all or parts of the company, a move some Yahoo investors have vigorously encouraged.
"I did not arrive here with preconceived notions about anything," she said, adding that she believes Yahoo's search business is an important and improving part of the company. Ms. Bartz has promised to better focus the Sunnyvale, Calif., company's array of products.
She said she is encouraged by the enormous amount of traffic generated by major properties such as the Yahoo homepage and Yahoo Finance.
"This is a fantastic Internet property," she said. "It really doesn't deserve everybody trying to pick it and pull it apart."
Ms. Bartz joined Yahoo earlier this month after the company concluded a two-month search for a CEO to replace Jerry Yang, whose year-and-a-half tenure included an unsuccessful takeover bid from Microsoft Corp. and a search alliance with Google Inc. that was scuttled.
Yahoo on Tuesday reported a net loss of $303.4 million, or 22 cents a share, compared with net income of $205.7 million, or 15 cents a share, a year earlier. It was the first quarter the company posted a loss since 2002. Revenue for the fourth quarter was $1.81 billion, down 1.4% from the same period the previous year.
The latest results included about $600 million in charges and write-downs the company booked for layoffs and other items. Yahoo ended the fourth quarter with 13,600 employees, down from 15,200 at the end of the third quarter.
For the current quarter, Yahoo forecast $1.53 billion to $1.73 billion in revenue, compared with revenue of $1.82 billion in the first quarter of 2008.
Some analysts took the projection as evidence that tough times will continue and may worsen.
"Bartz has her work cut out for her to turn around the business from a revenue-growth perspective," said Mark May, an analyst for Needham & Co.
In an interview, Yahoo Chief Financial Officer Blake Jorgensen said the company elected not to issue full-year of guidance as it usually does, given the uncertainty in the market.
"We're cautious and we're careful but at the same time we're pleased that advertisers are consolidating their buys toward higher-quality properties, of which we are one," he said.
In the fourth quarter, Yahoo struggled to offset a sales slowdown of high-priced banner ads that run on heavily trafficked sites such as its homepage and media properties by trying to drive growth in other areas, like search advertising.
Display advertising on its own sites fell 2%, down from 3% growth in the third quarter and double-digit growth during the first half of 2008. Search-advertising revenue rose 11% world-wide, down from 17% growth in the third-quarter.
The report comes at a pivotal time for the slumping company. While online advertising is still forecast to increase this year, Yahoo's share of the market is slipping and many of its new investments -- including a new homepage design and a new service that eases the process of buying and selling display ads -- are unproven or in a very early phase.
In 2008, Yahoo commanded 15% of U.S. online ad spending, down from 16% in 2007, according to estimates from market-research firm eMarketer.
Shares of Yahoo, which reported its results after the close of regular trading, increased 5% after hours to $11.95 after finishing at $11.34 on the Nasdaq Stock Market.
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