Yahoo!'s net income for the whole of 2008 was down 36% on 2007 to $424m.
The fourth-quarter loss was due to restructuring charges related to layoffs and write downs on its European properties. Net income earned in the fourth quarter of 2007 reached $206m.
Excluding certain items, the company said it would have earned 17 cents per share, a figure that would have improved on the prior year's results.
beat analysts' expectations by increasing its revenue during 2008 to $7.21bn, up 3% from almost $7bn in 2007.
The announcement boosted its share price up by as much as 76 cents to $12.10 in extended trading yesterday after closing at $11.34.
Carol Bartz, Yahoo!'s new chief executive, said: "We have work to do, but I am excited by Yahoo!'s opportunities, and encouraged by the tremendous innovation and momentum I've seen since joining the company as CEO."
Bartz made it clear she does not intend to sell the company to Microsoft, but she left open the possibility of a deal for Yahoo!'s search operations.
Microsoft proposed to buy Yahoo!'s search assets after the internet firm rejected its $44.6bn (£30.4bn) takeover offer last year.
Bartz said during a conference call on Monday: "It is my job to make sure that as a company we look at anything that makes sense long term for the company and creates shareholder value.
"So, yes, everything is on the table. But this is not a company that needs to be pulled apart and left for the chickens."
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