Internet portal Yahoo! saw profits fall by 78pc in its first-quarter results and is to cut 5pc of its workforce.
Revenues at the company fell 13pc to US$1.58bn, while net income fell to US$118m from US$537m last year.
The company, which is understood to be trying to forge a possible search advertising alliance with Microsoft, said that it will cut 5pc of its workforce, or 700 jobs across the board.
This is on top of 1,600 jobs the company committed to cutting in October.
Yahoo!’s operating cash flow was US$409m, short of the US$415m it forecast in January.
“Yahoo! is not immune to the ongoing economic downturn, but careful cost management in the first quarter allowed our operating cash flow to come in near the high end of our outlook range,” said Yahoo! chief executive officer Carol Bartz.
“While we experienced pressure in both display and search advertising in the first quarter, we believe Yahoo! remains one of the most compelling advertising buys on the Internet.
“With our leading audience properties, substantial reach and innovative advertising solutions, we are confident Yahoo! will be well positioned when online brand advertising resumes its growth,” Bartz said.
By John Kennedy