Internet portal Yahoo has been losing money for fifteen months straight, essentially because of extremely weak online advertising revenues, the company said.

"Most advertising agencies have said their spending this year will be flat and we're counting on that," said chief executive Terry Semel who took over when Tim Koogle resigned last spring.

But Yahoo's losses have narrowed, from $98m during the last three months of 2000 to just under $9m during the last three months of last year.

Yahoo reduced its losses despite a near 40% fall in earnings, from $311m during the 2000 autumn to $189m during the last three months of 2001.

This means the company's operating profits were three times greater than analysts had expected.

"It looks like they did a good job in growing revenues," said CIBC Oppenheimer analyst John Corcoran.

Diversification

The future looks brighter too, the company said, predicting sales and earnings in line with the most optimistic analysts' expectations.

The company has started charging for some of its services, and it has moved into new business areas to reduce its dependence on advertising revenue.

"It looks like things are improving," said Paul Kim, analyst at Kaufman Bros, adding that "2002 guidance is great".

As expected, Yahoo's president and operating officer, Jeff Mallett, will step down later this year, the company said.

Yahoo shares rose to $18.01 in after-hours trade, having closed down $1.60 at $17.87 before the market closed.