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Yahoo today announced fourth-quarter sales and earnings that narrowly surpassed Street estimates, earning $312 million, or $0.24 a share, on sales of $1.2 billion, down 4 percent from the year-ago quarter.
Analysts pegged the Sunnyvale, Calif.-based firm for a profit of $0.22 a share on sales of $1.19 billion.
Ahead of the earnings report, Yahoo (NASDAQ: YHOO) announced its second round of layoffs in as many months, trimming between 100 and 150 employees-- roughly 1 percent of its total headcount -- in yet another cost-cutting move after pink-slipping 4 percent of its employees in December.
"The personnel changes we are making are part of our ongoing strategy to best position Yahoo for revenue growth and margin expansion and to support our strategy to deliver differentiated products and experiences to the marketplace," the company said in a statement. "Well continue to hire on a global basis to support our key priorities."
Meanwhile, Google (NASDAQ: GOOG), which continues to grow sales and profits at a breakneck pace and largely at Yahoo's expense, announced it would hire at least another 6,200 workers this year.
Last quarter, Yahoo rode better-than-expected display advertising sales and margins to top analysts' estimates, returning a profit of $296 million, or $0.29 a share, on sales of $1.12 billion.
This time around, Yahoo said its display advertising revenue rose 14 percent to $635 million, up from $560 million in the year-ago quarter.
"We just completed a very encouraging quarter and made substantial strides while investing in our new products to turn Yahoo around," CEO Carol Bartz told analysts during a conference call following the earnings release. "Our central focus is to increase profitability and revenue. To achieve these goals, we have to execute and that's what we've done the past two years."
Bartz pointed to the improved display advertising revenue as a sign that Yahoo has regained its bearings, adding that Yahoo's fourth-quarter ad sales growth was on par with its top competitors.
Total search revenue in the quarter, excluding traffic-acquisition costs (exTAC), fell 18 percent from the year-ago quarter to $388 million.
"Search is a very important area," Bartz said. "Anytime you make changes, it takes time for the marketplace to adjust. 2011 will be the final year of major competitive headwinds."
More concerning for Yahoo investors, the company said it now expecting first-quarter sales of between $1.02 billion and $1.08 billion, shy of the $1.13 billion most analysts were forecasting.
Yahoo exited the quarter with more than $3.6 billion in cash, down from $4.5 billion in the year-ago quarter.
In the year-ago quarter, Yahoo pocketed $153 million, or $0.11 a share, on sales of $1.7 billion.
Yahoo shares closed off $0.07 a share to $16.02 ahead of the earnings report but quickly shed another $0.61 a share, or 4 percent, to $15.41 in after-hours trading.
In recent months, the company has attempted to reignite interest among its users by retooling its email service by offering features that make it easier to navigate and interact with Facebook and Twitter.
"Our direction and innovation is based around personalized content for every user," Bartz said. "It's what we do best."
Despite these improvements, 20 of the 35 analysts following the stock rate it a "hold," with 13 others assigning either "buy" or "strong buy" recommendations.
The stock peaked at $19.12 a share in April before tumbling to a 52-week low of $12.94 in September.