Analysts said investors were relieved that the Internet company managed to beat their low expectations for the fourth quarter. However, its forecast for operating income in the current quarter was below Wall Street estimates.

"They didn't bleed to death as much as some of the bear scenarios," said Martin Pyykkonen, analyst at Wunderlich Securities.

Fourth-quarter profit, excluding write-downs and one-time charges associated with its restructuring efforts, rose to $238 million, or 17 cents per share, from $205.7 million, or 15 cents per share, a year earlier.

That beat analysts' average forecast for profit of 13 cents per share, according to Reuters Estimates.

But including the write-downs and charges, the company had a net loss of 22 cents.

Gross revenue, including payments to affiliated websites that carry Yahoo ads, fell 1 percent to $1.81 billion. Net revenue was $1.375 billion, in line with the average Wall Street forecast of $1.371 billion.

Yahoo said it expects income from operations of $75 million to $85 million in the first quarter, about half the average analyst forecast of $165 million, according to Reuters Estimates.

It forecast operating income before interest, taxes, depreciation and amortization of $365 million to $415 million, compared with the average Street estimate of $485 million.

The company also estimated revenue of $1.525 billion to $1.725 billion.

Several analysts were concerned that the company did not give full-year outlook.

"The market place is extremely difficult right now, we're still seeing strong growth in the search business and display has slowed down and I have no idea how advertisers will react over the next two or three quarters," Chief Financial Officer Blake Jorgensen said in an interview.

"We're only giving one quarter of guidance because of some of that uncertainty."

Yahoo, the leading provider of online display advertising, has been under pressure for nearly 12 months as it held fruitless merger or partnership talks with Microsoft Corp, Google Inc and Time Warner Inc's AOL.

During that time Yahoo has lost market share in search advertising, while display ad sales have been badly hit industrywide by the U.S. recession.

Carol Bartz replaced Yahoo co-founder Jerry Yang as chief executive earlier this month. Yang had been CEO for 18 months.

Yahoo shares rose to $11.69 in after-hours trading from their close on Nasdaq of $11.34.

(Reporting by Yinka Adegoke; editing by Richard Chang)

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