New York, January 25 (FinanceEnquiry.com) - With a slump in display advertising, Yahoo’s (NASDAQ: YHOO) fourth-quarter revenue fell short of estimates. The largest U.S. web portal has also trimmed its forecast sales short of estimates. The fourth-quarter revenue dropped to $1.17 billion, excluding sales passed on to partner sites, against analysts’ average estimates of $1.19 billion. The Sunnyvale, California-based company expects sales of between $1.03 billion and $1.11 billion in the current period.

Challenges facing the new CEO Scott Thompson are confounded with web users spending less time on its pages and choosing the social networks, such as Facebook. Users looking for information prefer search results generated by Google (NASDAQ: GOOG). Moreover, the European debt crisis and the weak economy have brought down display ad buying.

Thompson is exploring all avenues to reverse Yahoo’s market share losses and user defections. He is also in the process of evolving a new strategy that might include selling Asian assets. However, analysts feel that his task will be an uphill battle for turning the company around.

Yahoo’s market share in the U.S. online-advertising market dropped from 13 percent a year earlier to 11 percent in 2011. Its display revenue dropped 4 percent to $546 million in the fourth quarter after remaining unchanged in the third quarter. Yahoo’s shares gained less than 1 percent to close at $15.69 in New York. Last year, the stock dropped 3 percent. The company’s forecast of income from operations in the first quarter is between $105 million and $155 million, against analysts’ projection of $184.2 million.