Yahoo Reports Higher-Than-Expected Display Revenue in Q4

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The holiday season seems to have shaped up better than anticipated for Yahoo - at least when it comes to display advertising revenues. The company said display revenues grew 16 percent to $567 million in Q4 2010, close to the 17 percent growth in display Yahoo experienced in Q3 of last year.

At that time, Yahoo CFO Tim Morse predicted display ad revenue could slow in Q4 due to consumer uncertainty, despite momentum in recent quarters. Last quarter, display revenue on the company's owned and operated sites was $465 million.

"We believe our growth in display significantly outpaced the market," said Yahoo CEO Carol Bartz during this afternoon's earnings call, touting display brand clients including Walmart, Macy’s and Toyota.

Ad impression growth drove premium and non-premium display revenue growth, said Yahoo CFO Tim Morse. "In short, we were really pleased with fourth quarter," said Morse. Both Bartz and Morse stressed Yahoo's focus on dominating when it comes to aggregating and developing personalized content.

Meanwhile, search ad revenues continue to fall following the completed transition of Yahoo's U.S. and Canada search operations to Microsoft's platform. Yahoo search revenues dropped 18 percent to $388 million, the company reported.

Boasting higher operating income and revenues than anticipated, the company reported overall revenue fell 4 percent to $1.2 billion year-over-year. The firm attributed the drop to revenue share paid to Microsoft, in addition to $27 million lost through the discontinuation of its paid inclusion ad product, and the sale of HotJobs and e-mail firm Zimbra.

Yahoo will cut around 1 percent of its staff, reportedly mostly media and advertising staff. The firm laid off around 600 last month.

In November, Yahoo unveiled a beta version of a daily deals channel involving revenue shares with partners including Groupon, LivingSocial, Gilt City, Coupons.com and Valpak.