Yahoo Sinks After 4th-Qtr Report

The stock dropped $1.76, or 8.5 percent, to $19.06 in midday trading. Earlier, the shares traded as low as $18.58 their lowest point since October 2003. In the 52 weeks before Wednesday, the shares had traded between $18.72 and $34.08.

Late Tuesday, Yahoo said its fourth-quarter earnings fell almost 24 percent, and the company gave a 2008 revenue outlook range that was mostly below analysts' estimates. The company also said it would lay off 7 percent of its 14,300-employee work force, or up to 1,000 employees.

After the announcements, several analysts downgraded ratings or lowered price targets for Yahoo's stock.

Pacific Crest analyst Steve Weinstein downgraded the stock, lowering his rating to "Sector Perform" from "Outperform," saying 2008 is becoming an investment year for the company and that its fundamentals are underperforming the industry's.

Weinstein also called Yahoo's revenue outlook "worse than expected."

The company's revenue outlook calls for $5.35 billion to $5.95 billion during 2008, excluding commissions paid to its advertising partners. Analysts polled by Thomson Financial expect $5.88 billion.

"Pressures are coming from higher traffic acquisition cost, renegotiated access deals with (Rogers Communications Inc.) and (AT&T Inc.), and increasing investments," he said, along with the job cuts.

The analyst lowered his 2008 revenue and earnings-per-share estimates to account for pressures Yahoo is facing, and now expects 2008 earnings of 42 cents per share on $5.52 billion in revenue, down from 51 cents per share on $5.92 billion.

Citi Investment Research and Oppenheimer & Co. analysts also lowered their ratings for the stock.