Yahoo inc reported a 64 percent drop in profit

Yahoo! Inc., the Internet aggregation that alone a takeover action from Microsoft Corp., appear a 64 percent bead in accumulation and appear affairs to cut at atomic 10 percent of its agents afterwards commercial spending slowed.

Third-quarter net assets fell to $54.3 million, or 4 cents a share, from $151.3 million, or 11 cents, a year earlier, Yahoo said today in a statement. Sales, excluding fees anesthetized on to accomplice sites, rose 3 percent to $1.33 billion.

The online ad market, abject down by crumbling customer spending and tighter credit, is putting burden on Chief Executive Officer Jerry Yang to carve costs. The agents cuts, apery at atomic 1,500 jobs, are allotment of a plan to save added than $400 actor annually. Yahoo aswell said it was extenuative banknote for acquisitions, fueling belief that a accord to buy Time Warner Inc.'s AOL assemblage may be in the works.

``They accept a lot added they could cut,'' Darren Chervitz, analysis administrator at Jacob Asset Management, said in an account with Bloomberg Television. ``This aggregation over the years congenital up a lot of fat and authority in the organization.''

Yahoo, based in Sunnyvale, California, rose 85 cents, or 7 percent, to $12.92 in continued trading afterwards the job cuts were announced. The shares, down 48 percent this year, had collapsed 79 cents to $12.07 in approved Nasdaq Banal Bazaar trading.

Lower Forecast

Yahoo anticipation 2008 gross sales of $7.18 billion to $7.38 billion, down from a antecedent anticipation of at atomic $7.35 billion.

Excluding items such as stock-options expenses, accumulation was 15 cents a allotment endure quarter, analogous the boilerplate appraisal of analysts surveyed by Bloomberg. They had predicted sales of $1.37 billion, excluding the fees paid to accomplice sites.

U.S. Web ad sales advance may abatement beneath 20 percent this year for the aboriginal time aback 2002, according to Collins Stewart Plc. Yahoo gets a lot of of its acquirement from advertising, either in the anatomy of seek links or affectation ads such as Web banners.

The aggregation has hardly added than 15,000 workers, Chief Financial Officer Blake Jorgensen said today in an interview. Yahoo assassin consulting abutting Bain & Co. endure ages to appraise expenses.

Yahoo aswell may abate its amount of contractors, which currently absolute ``a brace thousand,'' Jorgensen said. The aggregation is acid real-estate costs, as able-bodied as evaluating the accretion arrangement it uses to adjustment services.

Yahoo may accept to arrangement with added companies for some of the appearance it offers online, as it did this year if it adapted its music download account to one offered by RealNetworks Inc., Jorgensen said.

Handling a Recession

``The focus is to accomplish abiding we are bigger positioned to handle a long-term, abiding recession if that does occur,'' Jorgensen said. ``We're aswell authoritative abiding those costs get out of the arrangement for good.''

Yahoo is captivation aback on banal buybacks and attention cash, potentially for use in acquisitions, Jorgensen said on a appointment call. The aggregation would accede purchases that addition its allotment of users and ad buyers, Yang said.

``To the admeasurement we see a way to add assimilate that calibration and strength, I anticipate we charge to do that,'' Yang said. ``We can accretion a lot of calibration in this blazon of ambiance because there isn't a lot of advance in acceding of spending.''

The comments adumbrated that Yahoo is abutting to a accord to acquirement AOL, said Colin Gillis, an analyst at Canaccord Adams Inc. in New York. Yahoo and Time Warner accept been discussing a transaction aback at atomic April.

Pluses, Minuses

An AOL accretion would accomplish Yahoo added accessible to a abatement in spending on account ads online, aback that's AOL's strength, said Gillis, who advises captivation on to Yahoo shares. If advance accelerates in 2010, the accord could advice Yahoo by addition its allocation of the market, he said.

Jorgensen beneath to animadversion on AOL. Keith Cocozza, a Time Warner spokesman, didn't acknowledgment a buzz message.

While Yahoo leads the bazaar for account ads, it trails Google Inc. in promotions that run alongside seek results, a class advertisers more adopt because they can admeasurement how generally consumers respond, said Sandeep Aggarwal, an analyst at Collins Stewart in San Francisco.

U.S. sales of affectation ads will abound 17 percent this year to $8.3 billion, abaft seek ad advance of 22 percent to $11 billion, Barclays Capital said in a address this month.

Google fielded 63 percent of U.S. Web seek queries in August. Yahoo ranked additional with 20 percent. Microsoft, which offered as abundant as $47.5 billion for Yahoo this year, had 8.3 percent.

Google Partnership

Microsoft absolved abroad from takeover talks in May afterwards Yang approved a college offer. Yang instead agreed to let Google advertise some seek ads for Yahoo, a affiliation beneath analysis by the U.S. Justice Department.

The acceding with Google faces action from advertisers, rivals and customer advocates, who say it will abuse competition. The companies said this ages they would adjournment the acceding until the government completes its review.

Microsoft CEO Steve Ballmer said endure anniversary that a accord amid his aggregation and Yahoo ability still accomplish bread-and-butter sense. There are no discussions now, Redmond, Washington-based Microsoft said. Yahoo agent Brad Williams beneath to comment.