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Yahoo shares rose in after-hours trading as the company reported a loss of $303 million, or 22 cents per share, in the fourth quarter of 2008.
In the fourth quarter of 2007, Yahoo earned $206 million, or 15 cents per share.
The loss covered more than $500 million worth of one-time charges, the company reported during an earnings conference call Tuesday.
"We performed well in a challenging operating environment," Yahoo CFO Blake Jorgensen said.
The company reported spending about $137 million on severance and reorganization. It laid off about 1,500 employees last month, reducing its workforce from 16,000 in the third quarter to 13,600. Yahoo also reported $488 million in international business expenses during the fourth quarter.
Excluding one-time charges, the company earned $238 million, or about 17 cents per share, Yahoo said. Those figures beat predictions that Yahoo would generate 13 cents per share, without accounting for the one-time costs.
Revenue dropped 1% to $1.81 billion, and the company's ad revenue was essentially flat at $1.59 billion, despite the challenges economic conditions have placed on ad sales.
New CEO Carol Bartz opened the call by saying that Yahoo, like other companies, is feeling the impact of the overall economic climate.
Yahoo doesn't plan to release forecasts for 2009 but projected revenue of $1.53 billion to $1.73 billion in the first quarter. That's down from last year's $1.82 billion in revenue.
Company leaders said they don't expect major cuts like those in December, but they'll look for ways to trim expenses with precision.
Bartz said that the situation at Yahoo isn't as bad as some media reports and outside opinions would suggest. She expressed confidence in the company's products and positions, while indicating its internal structure and communications processes should be less complex.
Bartz said she has a "total maniacal interest in delighting our customers." That, she said, would generate ads, broaden customer base, and create a positive loop.
Shares rose more than 4% during extended trading, up to $11.83 after closing up at $11.34.