According to the company, it will lay off 1,000 of its 14,300 employees starting next month. Yang said in a conference call the company hopes to return to growth in 2009 by restructuring.

"This is a pivotal time for Yahoo's business and we have a unique window of opportunity right now to make the necessary, game-changing investments," he said, according to The Post.

Yahoo has been watching its profits drop over several quarters. Its fourth-quarter profit fell to $206 million from $269 million in the same period of 2006. Revenue was up to $1.83 billion from $1.7 billion. Profit for 2007 was $660 million, down from $751 million in 2006. Revenue was $6.97 billion, which was up from $6.43 billion. Its shares closed up 3 cents Tuesday at $20.81.

"Yahoo has got some fairly serious issues," said Jeffrey Lindsay, analyst at Sanford C. Bernstein, according to The Post. He also pointed out Yahoo's advertising business is vulnerable in a downward economy, when many advertisers either cancel or decline to renew their contracts.

Although Yahoo is trying hard to retain its users, it is still losing a share of the online search market - one of its key drivers of online advertising and an area Google dominates. Search market share for Yahoo slipped to 17 percent from 21 percent over the year, according to ComScore.

Yahoo, which sells high-speed Internet service through partnerships with telecom companies such as AT&T, could lose those lucrative deals, some analysts pointed out.

Yahoo President Sue Decker responded Tuesday that the company has restructured its broadband contracts, but did not mention the speculation that AT&T may drop Yahoo entirely. Terms of the revised deal were not disclosed, according to the Post article, posted on the Media InfoCenter's Web site.