Excluding commissions paid to partners, Yahoo's revenue dropped 3% to $1.17bn (£750m) for the quarter ended 31 December, compared with $1.21bn in the same period last year.
Net income was down 5% year on year to $296m.
Display revenue was $546m, a 4% decrease, while search revenue was $376m, a 3% drop.
Revenues in EMEA, however, were up, from $106m for the fourth quarter of 2010, to $110m a year later.
Thompson, , said the 10% year-on-year increase in operating income to $242m showed how the company "continued to make progress."
He said: "In 2012, we will be aligning resources behind key areas of focus to enable us to move aggressively in market and grow our business, bringing innovative new products and experiences to both our users and advertisers."
Last quarter saw Yahoo sign an agreement with AOL and Microsoft to allow each to sell the others' premium non-reserved online display inventory, potentially boosting display ad sales.
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