Investors, disappointed by its performance, had continued to sell the company's shares which closed the same day at 12.07 dollars, down nearly 50 percent since the beginning of the year.

Yahoo added the purpose of the workforce cut is to reduce costs as its net income for the quarter fell 64 percent, to 54 million dollars, or 4 cents a share, from 151 million, or 11 cents a share, a year earlier.

Excluding the cost of stock options and other items, the company's income was 123 million dolars, or 9 cents a share, compared with 11 cents a share a year ago.

Against the Wall Street financial recession and an economic slowdown nationwide, Yahoo said its online advertising business revenue rose a mere 1 percent to 1.786 billion dollars, from 1.768 billion a year ago. Net revenue, which excludes commissions paid to advertising partners, was 1.32 billion dollars, compared with 1.28 billion a year ago, a 3 percent jump.

The results were short of analysts’expectations reduced only recently. On average, Wall Street analysts expected the company to report net income of 9 cents a share on net revenue of 1.37 billion dollars.

"As economic conditions and online advertising softened in the third quarter, we remained highly focused on our 2008 strategy to invest in initiatives that enhance not only our long-term competitiveness, but also our ability to deliver for users and advertisers even in this more difficult climate," Jerry Yang, Yahoo’s chief executive, said in a statement.

Yahoo's goal was to cut costs by more than 400 million dollars yearly by 2008's end. Under Yang, who became chief executive in June 2007, according to analysts, Yahoo has not been able to produce a credible plan to address the situation, and the current workforce cuts of 1,500 will not necessarily encourage investors to see a brighter picture.

"We have been disappointed to see so little movement, not just in headcount reduction, but in new directions for the company since Jerry Yang was made C.E.O.," said Derek Brown, an analyst with Cantor Fitzgerald, as quoted by media reports.

Earlier this year, Yahoo cut some 1,000 workers, but a steady stream of new hires has made its workforce rebounce to more than 15,000 employees, approximately the same number as at the beginning of the year.

Many investors say that Yahoo’s biggest mistake was to rebuff a buyout bid from Microsoft in May. Microsoft withdrew its offer after Yang said it was too low.

However, on Tuesday, Google’s chief executive, Eric E. Schmidt, said the companies had agreed to continue talking with regulators.

Yahoo has also been talking with AOL about a possible merger that would create a powerhouse in display advertising. But the companies have not been able to agree on price.

"We think it is not happening because there is a huge gap on the price," said Jeffrey Lindsay, an analyst with Sanford Bernstein & Company, noting a merger with AOL would not solve Yahoo problems.

"Yahoo has had terrible trouble time reducing its own staff,”Lindsay said, "AOL is a way forward but it would require tough discipline that Yahoo hasn’t shown before. It is not a low risk option."