Yahoo Reports Lowered Quarterly Loss, SalesYahoo Reports Lowered Quarterly Loss, Sales

Amid the roughest advertising market of its young life, Yahoo Wednesday reported fourth-quarter sales down almost 40% from a year ago. The Internet search portal, still one of the largest recipients of online advertising, lost money for the quarter and its operating profit continued to shrink, but it increased its forecast for this year's sales and earnings.

For the quarter ended Dec.31, Yahoo lost $8.7 million on revenue of $188.9 million, compared with a loss of $97.8 million on revenue of $310.9 million for the same period last year. Its operating profit for the quarter reached $16.7 million, slightly better than the average forecast by Wall Street analysts. However, the operating profit is sharply lower compared with the operating profit of $80.2 million for the fourth quarter 2000.

The company also said Wednesday that president and chief operating officer Jeff Mallett would leave the company in April to devote more time to family and business interests.

The company still has a long way to go to generate revenue from non-advertising efforts such as E-commerce transactions or fees for enterprise portal services. Online advertising makes up roughly 80% of Yahoo's revenue, a figure the company hopes to reduce to about 50% in two years.

"You can't get away from the fact Yahoo is a media company, and the main driver of media is advertising," says Kaufman Bros. senior media analyst Paul Kim. However, Kim says the overall news is optimistic relative to lowered expectations. Impressed by Yahoo's continued cost cutting, Kim also believes there are signs that the market has bottomed out.