BGC Voice and Electronic Brokerage

The Internet advertising market is clearly recovering but most of the improvement in Yahoo Inc.'s (YHOO) fourth-quarter display-advertising revenue stemmed from company efforts to improve ad quality and improve customer experience, Chief Financial Officer Tim Morse said Tuesday.

"The ad-market recovery is clearly underway. We've now seen three good quarters of evidence of that," he said. "But the majority of [Yahoo's improved display-ad revenue] is attributable to the company's hard work."

Morse made his comments in an interview with Dow Jones after the Internet giant said it swung to a fourth-quarter profit following year-earlier charges as demand for premium display advertising rebounded sharply.

Yahoo reported that display-advertising revenue from its owned and operated Web sites grew 26% compared to the third quarter of 2009, topping Wall Street expectations.

But Morse said it was too early to tell whether Yahoo was gaining or losing share in the display-advertising market.

Analysts also questioned whether Yahoo will be able to maintain momentum in its key display-advertising business.

"Is this revenue growth a product of a year-end [advertiser] budget flush? Or are they going to be able to maintain it?" asked Colin Gillis, analyst at BGC Partners.

Yahoo posted earnings of $153 million, or 11 cents a share, compared with a year-earlier loss of $303.4 million, or 22 cents a share. Excluding restructuring costs and other items, earnings fell to 15 cents from 21 cents a share. Analysts polled by Thomson Reuters were looking for 11 cents a share.

Total revenue decreased 4.1% to $1.73 billion, above with the company's October forecast of $1.6 billion to $1.7 billion. Revenue excluding traffic-acquisition costs dropped 8.5% to $1.26 billion.

Colin Gillis Comments: Yahoo! CFO Says Display-Ad Gains Due To Company's Hard Work- Wall Street Journal

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