January 28, 2009

NEW YORK - Yahoo Inc. shares climbed in premarket trading Wednesday after reporting fourth-quarter financial results that showed the company is weathering the downturn better than analysts expected.

Shares rose 61 cents, or 5.4 percent, to $11.95 despite an overall loss for Yahoo during the quarter and comments from the company's new CEO that put a damper on hopes for any quick deal with Microsoft.

Without a clear signal that its newly installed chief, Carol Bartz, will seek a deal in the near term, most analysts seemed focused on what her next move will be.

"Overall, we believe the December quarter does not matter because investors are waiting to hear about a plan from Carol Bartz," Piper Jaffray analyst Gene Munster told investors in a note. Munster has a "Buy" rating on Yahoo shares.

The Sunnyvale, Calif.-based company posted a loss of $303 million for the fourth quarter on Tuesday, suffering from a decline in display advertising revenue. But the results weren't as painful as some expected.

"Given the pressures of the macroeconomic environment we were surprised that the decline in display (advertising) wasn't greater than" 2 percent, Thomas Weisel Partners analyst Christa Quarles said in a note.

But Quarles, who has an "Underweight" rating on the stock, also pointed out the company's murky outlook — Yahoo declined to give full-year projections for 2009 — and said she was surprised its first-quarter profit margin estimate wasn't higher, given recent staff cuts.

Though Bartz is still drawing mostly positive reviews, analyst see a difficult period ahead for Yahoo.

In a note Tuesday, Citi Investment Research analyst Mark Mahaney described Bartz as "a top-notch CEO" who "could effect a turnaround, although we think the odds are long." He reiterated a "Hold" rating on shares.