updated 1/30/2008 3:57:54 PM ET 2008-01-30T20:57:54

Shares of Yahoo Inc. fell to a new multiyear low Wednesday as investors and analysts reacted negatively to the online search engine operator's weak fourth-quarter results, 2008 outlook, and job cuts.

The stock dropped $1.76, or 8.5 percent, to $19.06 in midday trading. Earlier, the shares traded as low as $18.58 — their lowest point since October 2003. In the 52 weeks before Wednesday, the shares had traded between $18.72 and $34.08.

Late Tuesday, Yahoo said its fourth-quarter earnings fell almost 24 percent, and the company gave a 2008 revenue outlook range that was mostly below analysts' estimates. The company also said it would lay off 7 percent of its 14,300-employee work force, or up to 1,000 employees.

After the announcements, several analysts downgraded ratings or lowered price targets for Yahoo's stock.

Pacific Crest analyst Steve Weinstein downgraded the stock, lowering his rating to "Sector Perform" from "Outperform," saying 2008 is becoming an investment year for the company and that its fundamentals are underperforming the industry's.

Weinstein also called Yahoo's revenue outlook "worse than expected."

The company's revenue outlook calls for $5.35 billion to $5.95 billion during 2008, excluding commissions paid to its advertising partners. Analysts polled by Thomson Financial expect $5.88 billion.

"Pressures are coming from higher traffic acquisition cost, renegotiated access deals with (Rogers Communications Inc.) and (AT&T Inc.), and increasing investments," he said, along with the job cuts.

The analyst lowered his 2008 revenue and earnings-per-share estimates to account for pressures Yahoo is facing, and now expects 2008 earnings of 42 cents per share on $5.52 billion in revenue, down from 51 cents per share on $5.92 billion.

Citi Investment Research and Oppenheimer & Co. analysts also lowered their ratings for the stock.

Banc of America Securities analyst Brian J. Pitz was among those who cut price targets, lowering his to $26 from $36 in a Tuesday note to investors. But Pitz, who maintains Yahoo shares at "Buy," said Yahoo "continues to be a company in transition" and its shares are currently a good value for long-term investors.

Meanwhile, Stifel Nicolaus analyst George I. Askew lowered his first-quarter and 2008 estimates for the company but kept his "Hold" rating in a client note. The analyst predicted Yahoo's shares will be "stuck in purgatory" for at least the next few quarters.

"We believe the company remains in the early stages of its turnaround and revised strategy, and faces challenges related to its evolving leadership and organizational structure, aggressive competition and acquisition integration," he wrote.

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