Yahoo continued to struggle with ad sales including both display and search advertising in the fourth quarter,

Both its revenue and net income both dropped year on year.

Yahoo must improve its services so that end users increase the time they spend at its sites, and so advertisers increase their spending.

“We need to innovate and disrupt,” Scott Thompson said. The former PayPal president who was recently appointed Yahoo CEO.

For the full fiscal year, revenue came in at $5 billion, down 21 percent compared with 2010. Subtracting partner commissions, revenue was $4.4 billion, down 5 percent. Revenue for the full year was impacted in part by Yahoo’s search advertising partnership with Microsoft, in which Yahoo pays Microsoft a commission on search ad sales and which includes a change in how Yahoo reports search ad revenue, the company said.

Source: Computerworld