Update: Yahoo's revenue drops in Q4 and for the full 2009 year

CEO Carol Bartz says she's happy with the results and that the company has good momentum for 2010

Yahoo's revenue fell both in the fourth quarter and in the full 2009 year, the company said Tuesday.

Year on year, revenue dropped 4 percent to $1.732 billion in the fourth quarter of 2009, ended Dec. 31, and 10 percent to $6.460 billion for the full 2009 year.

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Net income in the quarter came in at $153 million, or $0.11 per share, compared with a net loss of $303 million, or $0.22 per share, in 2008's fourth quarter, which was hit by one-time costs including restructuring charges.

On a pro forma basis, which excludes the one-time items, net income was $214 million, or $0.15 per share, in the quarter, down from net income of $295 million, or $0.21 per share, in 2008's fourth quarter.

For the full 2009, net income was $598 million, or $0.42 per share, up from net income of $419 million, or $0.29 per share, for 2008. Pro forma net income for 2009 was $887 million, or $0.63 per share, compared to $980 million, or $0.70 per share, for 2008.

Yahoo CEO Carol Bartz, who recently completed her first year at the company's helm, said she was satisfied with the results, which have given Yahoo good momentum in 2010.

Bartz called her first year as Yahoo CEO "a wonderful ride, very bumpy" and said she was glad to see the economically turbulent 2009 come to a close.

"It was a great opportunity to restructure, reset and position Yahoo for the next era of growth," Bartz said during a conference call to discuss the results.

Yahoo makes most of its revenue from online advertising. Its specialty is display advertising, such as banner ads, a segment that didn't perform as well last year as search advertising, which Google dominates.

However, Bartz said Yahoo saw clear indications of a rebound during the fourth quarter for display advertising, both "guaranteed" inventory for which advertisers pay a premium, as well as less-expensive, "non-guaranteed" ad space.

In search advertising, Yahoo grew its revenue in its sites sequentially in the fourth quarter for the first time since 2008's third quarter, Bartz said. "Overall, we seem to be returning to a more normal state in the online ad business,” she said.

CFO Tim Morse said the company increased display ad revenue on its sites by 26 percent sequentially in the fourth quarter, the largest such jump since 2006. "We believe the ad market recovery is under way," Morse said.

Yahoo doesn't expect revenue sharing to kick in this year from its search advertising and technology deal with Microsoft, Morse said. That deal was struck last year but is awaiting regulatory clearance.

Revenue for the first quarter of 2010 is expected to be between $1.575 billion and $1.675 billion.

As part of its investment strategy, Yahoo will look to acquire companies that it believes will help it strengthen its staff, technology and products, Bartz said

A key area will be improving Yahoo's ability to target ads to its global audience of about 600 million visitors, she said. Although Yahoo is one of the best in ad targeting and consumer insight, the company isn't close to maximizing the value of its audience for advertisers, Bartz said.

"We've been letting great data about the consumers, data that's very attractive to advertisers, fall to the floor," Bartz said.

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