Yahoo Posts Higher Profit, Outstrips Forecasts

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Yahoo posted a higher fourth-quarter profit on Tuesday, beating Wall Street forecasts after several months of cost-cutting initiatives in the face of a weak advertising market.

The Silicon Valley -based Web pioneer said adjusted net profit for the fourth quarter rose to $238 million, or 17 cents per share, from $205.7 million, or 15 cents per share, a year earlier.

Analysts on average had expected a profit of 13 cents per share, according to Reuters Estimates.

Yahoo shares , which rose 1.5 percent to $11.34 on the Nasdaq Tuesday, tacked on another 3 percent in extended trading.

But including write-downs and one-time charges associated with its restructuring, the company swung to a net loss of 22 cents.

Video: CNBC's Jim Goldman parses Yahoo's earnings.

Gross revenue, including payments to affiliated websites that carry Yahoo ads, rose 1 percent to $1.81 billion. Net revenue was $1.375 billion, compared with the average Wall Street forecast of $1.371 billion.

Yahoo said it expects first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of $365 million to $415 million, compared with an average forecast of $485 million. It also estimated revenue of $1.525 billion to $1.725 billion.

Yahoo, the leading provider of online display advertising, has been under pressure for nearly 12 months as it held fruitless merger or partnership talks with Microsoft, Google and Time Warner's AOL.

During that time Yahoo has lost market share in search advertising, while display ad sales have been badly hit industrywide by the U.S. recession.

Carol Bartz replaced Yahoo co-founder Jerry Yang as chief executive earlier this month. Yang had been CEO for 18 months.

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- CNBC.com staff contributed to this report.

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