Wall Street was looking for a profit, on average, of 8 cents per share, according to Reuters Estimates. Net revenue forecasts had ranged from $1.29 billion to $1.43 billion, the same data showed.

Yahoo President Susan Decker said the company struggled as corporate brand advertisers scaled back spending on Web marketing promotions, not only in the United States but also across Europe and Asia. Marketers in the travel and retail industries have been canceling some contracts, she said.

"We are still seeing a weakening trend in some Asian markets," Decker said.

Yahoo co-founder and Chief Executive Jerry Yang put a brave face on the situation, saying that while its premium display advertising business was declining, Yahoo appeared to be gaining market share as buyers consolidated their spending.

"I am encouraged that most advertisers who are still spending in this environment are spending with Yahoo," Yang said.

GLOOMY OUTLOOK, NARROWING OPTIONS

Yahoo forecast fourth-quarter gross revenue at between $1.773 billion and $1.973 billion. That represents a decline of 3 per cent to a modest growth of 8 per cent from the year-earlier quarter's $1.83 billion.

"I had been predicting they would reduce their guidance for (the fourth quarter) but they really whacked it," said Martin Pyykkonen, an analyst with Wunderlich Securities.

"It had been in the mid-teens, now it's just barely over 2 per cent for revenue growth in the fourth quarter, normally a seasonally strong one," he said, referring to the midpoint of the per centage growth Yahoo has forecast.

... contd.