[steve8918]

This is the danger of relying on a single financial measure to determine the health of a company. That's like only using a person's weight to determine if they're fat or skinny, when it also depends on how tall they are, their gender, the amount of muscle they have, etc.

Their net income may have increased, but they did it by selling businesses (Hotjobs and Zimbra) and cutting costs (sales and marketing and product development) dramatically. Their revenues have dropped considerably, and they have had a humungous brain drain. The 2011 estimates for annual revenues are $4.4 billion, down from $6.3 billion in 2010 and from $7.2B in 2008. That's a plunge of 30% YoY.

This is what a death spiral is. They achieved profitability by hacking and slashing. At some point, which was likely already passed, you cut to the bone, and you no longer can sustain a viable company, and the pace of decline gets quicker.

[fleitz]

Conversely you could argue that they cut unprofitable fat that while bringing in revenue did not bring in profit. Hotjobs and Zimbra don't strike me as particularly profitable.

Also, often times the best outcome for shareholders is to wind down the business and allow them to reinvest the profits, which so far is not an action that YHOO has taken.