Yahoo reported earnings after the market closed today.

Yahoo  had net revenue of $1.21 billion, down 4% drop from the 4th quarter of 2009.

4th Q net income rose to $312 million, or 24 cents a share, from $153 million or 11 cents a share in the same period a year earlier.

Yahoo said its search-advertising revenue fell 27% in the 4th quarter compared with the period in the prior year.

Shares are trading at $15.52 down 3% in after market trading.

“We just completed a very encouraging quarter and year … where we saw our plans to turn around the company gain momentum,” Yahoo Chief Executive Carol Bartz said in a statement.

Yahoo also said earlier today that it was cutting roughly 1% of its workforce.

“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,” the Yahoo spokeswoman said in a statement.

Here is some additional info from the earning report:

Fourth Quarter 2010 Revenue Results

• GAAP display revenue increased 14 percent to $635 million, compared to $560 million for the fourth quarter of 2009.
• Display revenue ex-TAC increased 16 percent to $567 million, compared to $490 million for the fourth quarter of 2009.
• GAAP search revenue was $640 million, a 27 percent decrease compared to $875 million for the fourth quarter of 2009.
• Search revenue ex-TAC was $388 million, an 18 percent decrease compared to $473 million for the fourth quarter of 2009.

Cash Flow and Cash Balance

• Cash flow from operating activities for the fourth quarter of 2010 was $403 million, a 15 percent increase compared to $351 million for the same period of 2009.
• Free cash flow was $155 million for the fourth quarter of 2010, a 29 percent decrease compared to $220 million for the same period of 2009.
• Cash, cash equivalents, and investments in marketable debt securities were $3,629 million at December 31, 2010 compared to $4,518 million at December 31, 2009, a decrease of $889 million. During the year ended December 31, 2010, Yahoo! repurchased 119 million shares for $1,749 million.

Business Outlook

Revenue ex-TAC for the first quarter of 2011 is expected to be in the range of $1,020 million to $1,080 million. Based on the terms of the Search Agreement with Microsoft, Microsoft retains a revenue share of 12 percent of the net (after TAC) search revenue generated on Yahoo!’s Advertising Network in transitioned markets. Yahoo! reports the net revenue it receives under the Search Agreement as revenue and no longer presents the associated TAC within cost of revenue. Accordingly, for transitioned markets Yahoo! reports GAAP revenue associated with the Search Agreement on a net (after TAC) basis rather than a gross basis. For markets that have not yet transitioned, revenue continues to be recorded on a gross basis, and TAC is recorded in cost of revenue. Microsoft’s revenue share in the first quarter of 2011 is expected to be approximately $36 million. GAAP revenue for the first quarter of 2011 is expected to be in the range of $1,150 million to $1,230 million. Total expenses (cost of revenue plus total operating expenses) for the first quarter of 2011 is expected to be in the range of $1,020 million to $1,070 million. Total expenses less TAC for the first quarter of 2011 is expected to be in the range of $890 million to $920 million. Income from operations for the first quarter of 2011 is expected to be in the range of $130 million to $160 million.

Business outlook for revenue ex-TAC is being provided to reflect the underlying dynamics of the business during the Microsoft transition and to facilitate comparisons to prior periods.

For it current, first quarter, Yahoo said it expects net revenue to be between $1.02 billion and $1.08 billion.

Here is its P & L:

Yahoo! Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
			Three Months Ended December 31,										Year Ended December 31,
			2009					2010					2009					2010
	Revenue		$		1,731,977			$		1,525,109			$		6,460,315			$		6,324,651
	Cost of revenue				749,658					557,686					2,871,746					2,627,545
	Gross profit				982,319					967,423					3,588,569					3,697,106
	Operating expenses:
	Sales and marketing				357,470					298,508					1,245,350					1,264,491
	Product development				306,031					277,822					1,210,168					1,082,176
	General and administrative				149,282					125,755					580,352					488,332
	Amortization of intangibles				10,372					7,627					39,106					31,626
	Restructuring charges, net				40,409					37,735					126,901					57,957
	Total operating expenses				863,564					747,447					3,201,877					2,924,582
	Income from operations				118,755					219,976					386,692					772,524
	Other income, net				5,168					7,602					187,528					297,869
	Income before income taxes and earnings in equity interests				123,923					227,578					574,220					1,070,393
	Provision for income taxes				(36,831	)				(17,142	)				(219,321	)				(221,523	)
	Earnings in equity interests				68,646					107,511					250,390					395,758
	Net income				155,738					317,947					605,289					1,244,628
	Less: Net income attributable to noncontrolling interests				(2,784	)				(5,927	)				(7,297	)				(12,965	)
	Net income attributable to Yahoo! Inc.		$		152,954			$		312,020			$		597,992			$		1,231,663
	Net income attributable to Yahoo! Inc. common stockholders per share – diluted		$		0.11			$		0.24			$		0.42			$		0.90
	Shares used in per share calculation – diluted				1,416,974					1,311,682					1,415,658					1,364,612
	Stock-based compensation expense by function:
	Cost of revenue		$		1,829			$		986			$		10,759			$		3,275
	Sales and marketing				25,839					16,870					141,537					71,154
	Product development				42,082					25,513					205,971					106,665
	General and administrative				14,661					10,632					79,820					42,384
	Restructuring expense acceleration (reversals), net				18,662					(4,211	)				11,062					(4,211	)
	Supplemental Financial Data:
	Revenue ex-TAC		$		1,258,468			$		1,205,250			$		4,682,489			$		4,588,229
	Free cash flow		$		219,685			$		155,165			$		957,410			$		596,255