Yahoo posts higher profit but outlook weak

NEW YORK (Reuters) - Yahoo Inc posted a stronger-than-expected fourth-quarter profit on Tuesday, after several months of cost-cutting initiatives in the face of a weak advertising market, sending its shares up 3 percent.

Analysts said investors were relieved that the Internet company managed to beat their low expectations for the fourth quarter. However, its forecast for operating income in the current quarter was below Wall Street estimates.

"They didn't bleed to death as much as some of the bear scenarios," said Martin Pyykkonen, analyst at Wunderlich Securities.

Fourth-quarter profit, excluding write-downs and one-time charges associated with its restructuring efforts, rose to $238 million, or 17 cents per share, from $205.7 million, or 15 cents per share, a year earlier.

That beat analysts' average forecast for profit of 13 cents per share, according to Reuters Estimates.

But including the write-downs and charges, the company had a net loss of 22 cents.

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

Yahoo said it expects income from operations of $75 million to $85 million in the first quarter, about half the average analyst forecast of $165 million, according to Reuters Estimates.

It forecast operating income before interest, taxes, depreciation and amortization of $365 million to $415 million, compared with the average Street estimate of $485 million.