The company said net income for the quarter ended Dec. 31 fell to $206 million, or 15 cents a share, from $269 million, or 19 cents a share, for the same period a year ago. Contributing to the drop were stock-based compensation and other expenses. Operating income for the quarter plunged 38% to $191 million from $308 million a year ago.

Revenues rose 8% to $1.8 billion from $1.7 billion a year ago. Marketing services, which include online advertising sales, rose by 7% to $1.6 billion from $1.5 billion. Revenues from Yahoo's owned-and-operated sites rose by 23%, while sales on affiliate Web sites increased by 13%.

During a conference call with financial analysts, Yahoo chief executive Jerry Yang announced there would be a "realignment" of 1,000 jobs at the company, which had 14,300 employees as of the end of last year. As a result, the company expected to incur a $20 million to $25 million charge. Some employees would be shifted to other jobs, and the company planned to add people in areas deemed as priorities.

Yang told analysts the company was spending money to change its advertising platform and operations, and expected to exit 2008 stronger and more competitive, and return to higher levels of operating cash flow growth next year. "We're not tinkering around the edges," Yang said. "We're making significant and game-changing investments in Yahoo's future."

Yang said the company has made progress and was in position to capture a significant piece of the growing ad market. Yahoo, for example, saw 20% growth year over year in display advertising, which accounts for 40% of the company's revenue.

Growth in online advertising was expected to continue this year, although Yang had said in an earlier statement that the company expected to experience some "headwinds" in the market. A weakening U.S. and global economy could have an impact on the overall advertising market.

The highest growth in ad revenue was expected in the second half of the year when Yahoo rolls out major technical changes it has made in its platform that would increase indexing speeds for search, and improve ad distribution, executives said. Leading Yahoo's technology effort would be Aristotle "Ari" Balogh, 43, who was named Tuesday to the post of chief technology officer. Balogh had been CTO of security company VeriSign.

In its 2008 forecast, Yahoo expected revenues for $5.35 billion to $5.95 billion. The outlook disappointed Wall Street, and Yahoo shares fell more than 10% in after hours trading.

Yahoo also announced that it had renegotiated its contract with AT&T, which was set to expire this spring. The two companies would continue selling Internet access together and partner on content offered through the telephone company's TV service and Web portal.

The Internet pioneer has yet to show any progress against rival Google, which continues to dominate search on the Web and related advertising. Yahoo has long been a distant No. 2 in search, with Microsoft consistently in third place. Many analysts expect Google to continue to dominate the market this year.

Yahoo, however, remains strong in terms of attracting visitors. The portal in December had the largest audience with 136,634 visitors, according to ComScore. Google was second with 132,954, and Microsoft sites third with 120,034.

Nevertheless, Yahoo continues to struggle in the lucrative market for search-related advertising. The company's catch-up mode with Google and anemic stock prices led to chief executive Terry Semel stepping down last June.

As part of a settlement to a federal antitrust suit, the NCAA agreed Tuesday to make available $10 million that will provide supplemental money above the standard athletic grant-in-aid to athletes who have competed in Division I-A football and in 16 Division I men's basketball conferences between Feb. 17, 2002, and the present. The agreement, subject to approval by a U.S. District Court in Los Angeles, is in response to a class-action suit filed in February 2006 on behalf of former football players Jason White of Stanford and Brian Polak of UCLA, former San Francisco basketball player Jovan Harris and Chris Craig, a former Texas-El Paso basketball player.

The suit argued that restricting a scholarship to the cost of tuition, books, housing and meals was an unlawful restraint of trade because of the billions of dollars the NCAA earned through broadcast and licensing deals. NCAA general counsel Elsa Cole said she expects the court to approve the agreement.

The settlement says the $10 million will be made available over a period of three years to qualifying student-athletes — which the NCAA says could number 12,000 — to reimburse them for "bona fide educational expenses hereafter incurred, such as tuition, fees, books, supplies and equipment."

An NCAA study estimated athletes on full scholarships averaged $2,500 a year in out-of-pocket expenses. The settlement allows athletes to apply for as much as $2,500 a year for up to three years.

Cole said the $10 million will come from the NCAA's reserve fund. "That's money that's been set aside for emergency uses or unanticipated contingencies … maybe something like this," she said.

Stephen Morrissey, who represented White in the case said, "We think $2,500 is a significant chunk of the educational cost.

"We wanted terms defined as broadly as we could so even a kid who didn't graduate could pursue something like culinary school if he wants to, and this can allow him to get reimbursed. And teachers can pursue continuing education."

Morrissey said the case got within "a couple of months" of trial.

"This was a hard-fought case," he said. "They have really good lawyers, and a lot of them, and they were fighting every step of the way."

Athletes also will have easier access to another $218 million of existing funds with the settlement.

At a time when millions of Americans are buckling down to prepare their taxes, Snipes is being cast as a villainous example of the dangers of joining with Internet-fueled activists who claim the IRS has no authority to collect taxes.

Snipes, the star of the "Blade" films and "White Men Can't Jump," is on trial with two tax protesters in one of the biggest criminal cases in IRS history, and the agency hopes the media attention on the matter will dissuade others in the "tax avoidance" movement from trying to outwit the government.

"People who do it openly and notoriously, you've got to go after them," said Sheldon Cohen, who was IRS commissioner and general counsel in the 1960s. "Not because he's that important or the amount of money is that important, but because there are others who may be foolish enough to follow."

Snipes, 45, could get up to 16 years in prison if convicted on all counts, although sentences that long are unusual.

"I've always been paying my taxes; I've always been trying to comply," Snipes said Tuesday in his first substantive public comment since the trial began. "The question is if they tell you what you're supposed to do. We need to go to our government and get clear answers."

His two co-defendants are an anti-tax ideologue who refuses to defend himself in court and an accountant who lost his licenses. The trio rested their defense Monday without calling any witnesses, saying they didn't need to.

"Nobody likes paying taxes, but paying taxes is the price we pay to live in a civilized society," Assistant U.S. Attorney M. Scotland Morris said Tuesday in closing arguments. "And it's the law, and that's what this case is about. It's about three men who felt they were above the law."

Defense attorney Robert Barnes conceded Snipes' arguments may have been crazy, but insisted that didn't make them criminal.

"Disagreement with the IRS is not fraud of the IRS, is not deception," Barnes said. "It was an attempt to engage the IRS, to go through the IRS procedures and processes and see who's right."

In lengthy filings to the IRS, the three defendants claimed they did not legally have to pay taxes, citing an obscure section of the tax code that establishes that foreign sources of income for U.S. citizens are taxable. Protesters take that to mean only foreign sources are taxable, and wages made in this country are not.

"They string unconnected things together in a way that they're just not intended to be strung together," said Chris Rizek, a former Treasury Department lawyer who specialized in tax policy. "And the courts have repeatedly said 'No, that's the wrong interpretation, listen to this.' And they just don't listen."

Snipes, who is free on $1 million bond, was paying millions in federal income taxes until 2000 when, according to prosecutors, he accepted the arguments of his two co-defendants. Snipes then allegedly began seeking nearly $12 million in illegal refunds for taxes he already paid.

Snipes, alleged ringleader Eddie Ray Kahn and former CPA Douglas P. Rosile were indicted on eight counts alleging tax fraud, conspiracy and willful failure to file returns. Kahn now refuses to leave his jail cell because he believes the court has no jurisdiction to prosecute him.

The government says Kahn founded a group in the 1990s, American Rights Litigators, and a successor group, Guiding Light of God Ministries, that purported to help members legally avoid paying taxes. Rosile, a former accountant who lost his licenses in Ohio and Florida, prepared the paperwork. Snipes joined their group in 2000.

Witnesses for the prosecution have said up to 4,000 people refused to pay taxes based on the group's arguments.

The three men claimed the IRS is not a legitimate government agency. Snipes also argued in long, bizarre letters that he was a nonresident alien; that the IRS terrorizes and deceives citizens; and that efforts to prosecute him would cause "increased collateral risk."

Most tax cases are handled in civil court, because the IRS does not have enough agents or time to pursue criminal charges against ordinary taxpayers who fudge a deduction or a decimal place on their tax returns.

But pursuing the matter in criminal court carries other risks — the burden of proof is higher, and an acquittal would instantly galvanize the tax-avoidance movement, which already enjoys boundless exposure on the Internet.

The IRS has been successful in pursuing criminal cases against the movement's followers.

Last year, for example, a New Hampshire tax protester vowed to die fighting rather than be apprehended following criminal conviction on several tax charges. Several people were arrested trying to help Ed Brown and his wife avoid capture, and almost all of them were from other states.

Brown and his wife were taken peacefully, but only after agents tricked the couple into surrendering.

But there are exceptions. In 2003, FedEx pilot and tax protester Vernice Kuglin was acquitted because the jury found she sincerely believed she didn't have to pay taxes.

Kuglin's assets were seized, and the government got its tax money. Despite that, her case is held by some protesters as proof that the IRS is a sham, and citizens really don't have to pay taxes.

Cohen, the former IRS commissioner, said trials like Snipes' are important to discourage potential tax scofflaws from defying the government.

"Locks are important on windows to keep honest men from becoming thieves," Cohen said. "Because a thief can get into a window even if it's locked, right? But you do that as a deterrent."

Authorities said the firm made an estimated $250 million over two decades by filing such legal actions.

Seven people, including three former partners at the firm, have pleaded guilty in the case. Lazar was the first to be sentenced. He also was fined $600,000.

U.S. District Judge John F. Walter said he was outraged that a former attorney could "flatly lie" as part of legal proceedings.

The lack of respect for the legal system amounted to the "absolute height of arrogance," the judge said, adding that he would not have hesitated to send Lazar to prison if not for his age and deteriorating health. Lazar could have faced up to 18 years in federal prison.

Wearing a dark blue suit with a knitted sweater draped across his shoulders, presumably for extra warmth, the frail-sounding Lazar said he understood Walter's concerns but felt he had already been punished for his wrongdoing.

"I have been under investigation for seven or eight years and it has been seven or eight years of hard time," Lazar said. "That's all I can say."

With the judge's consent, Lazar remained seated throughout the hearing.

Lazar pleaded guilty in October to obstruction of justice, subscribing to a false tax return and making a false declaration to the court.

Walter said he spent the weekend thinking about a suitable sentence for Lazar, worrying that a noncustodial term would send a message that wealthy defendants can buy their way out of confinement.

But ultimately, Walter said Lazar's infirmity made him unsuitable for prison.

Lazar thanked the judge after the sentencing.

"Good luck to you," the judge replied.

Lazar then left the courtroom and was greeted by members of his family.

Lazar has already repaid $1.5 million of the money prosecutors said he was paid as part of the scheme.

The law firm, previously known as Milberg Weiss Bershad & Schulman, paid $11.3 million in kickbacks to people who became plaintiffs in class-action lawsuits against companies such as AT&T Inc., Lucent, WorldCom, Microsoft Corp. and Prudential Insurance, prosecutors said.

The tactic allowed the firm's attorneys to be among the first to file litigation and secure the lucrative position as lead plaintiffs' counsel, according to court documents.

The firm dominated the industry in securities class-action lawsuits, which involve shareholders who claim they suffered losses because executives misled them about a company's financial condition.

The three former partners who have pleaded guilty are William Lerach, Steven Schulman and David Bershad.

Lerach's high-profile legal victories included a $7 billion judgment against now-defunct energy giant Enron Corp. He pleaded guilty as part of a deal to conspiracy to obstruct justice and make false statements.

Schulman pleaded guilty to a racketeering conspiracy charge. He agreed to forfeit $1.85 million to the government and to pay a $250,000 fine.

Bershad pleaded guilty to conspiracy and agreed to cooperate with the government.

Firm co-founder Melvyn Weiss has pleaded not guilty to one count each of conspiracy, mail fraud, money laundering and obstruction of justice in a revised indictment.

The Milberg Weiss firm itself has pleaded not guilty to two counts of conspiracy and one count each of obstruction of justice and making false statements.

"The evidence is overwhelming that when voters do not have access to technology that notifies them of ballot errors, many more ballots are left uncounted," said Meredith Bell-Platts, a voting-rights attorney with the ACLU.

Cuyahoga County, which includes Cleveland and has more than 1 million registered voters, plans to send all paper ballots from precincts to a central location to be scanned and counted.

The ACLU alleges that the optical-scan system and centralized vote tabulation would not give voters notice of ballot errors — such as voting for two candidates for one office.

Opponents of the system say scanning should be done immediately at the precinct level to alert voters to such errors and allow them to correct invalid ballots.

U.S. District Judge Kathleen O'Malley set a deadline of Feb. 4 for the Ohio secretary of state and the county elections board to respond to the ACLU and a hearing for the next day on the request for a preliminary injunction.

Secretary of State Jennifer Brunner, Ohio's top elections official, said the thrust of the ACLU's request would rule out the use of absentee ballots because those voters wouldn't know whether they had made an error or get a chance to correct it.

Brunner said it would difficult to go back to the prior touch-screen voting system in time for the primary because of staff training and system testing requirements.

"The ACLU is too late," she said.

Messages seeking comment were left for Cuyahoga County Prosecutor Bill Mason, whose office handles legal matters for the elections board. Jane Platten, director of the Cuyahoga County elections board, referred requests for comment to Mason's office.

When the lawsuit was filed, Mason said he would challenge its contentions. Mason said the optical-scan system is permitted under the Help America Vote Act passed by Congress in 2002 in response to the disputed 2000 presidential election.

Democratic leaders of a House science subcommittee alleged yesterday that the Federal Emergency Management Agency manipulated scientific research into the potential danger posed by a toxic gas emitted in trailers still housing tens of thousands of survivors of hurricanes Katrina and Rita.

FEMA "ignored, hid and manipulated government research on the potential impact of long-term exposure to formaldehyde" on Katrina and Rita victims now living in the FEMA trailers, the congressmen wrote in a letter to Homeland Security Secretary Michael Chertoff, whose department includes FEMA.

Reps. Brad Miller (N.C.) and Nick Lampson (Tex.) cited agency documents given to Congress in alleging that the federal Centers for Disease Control and Prevention -- generally considered a repository of nonpartisan scientific expertise -- was "complicit in giving FEMA precisely what they wanted" to suppress the adverse health effects.

The lawmakers said the CDC's Agency for Toxic Substances and Disease Registry ignored one of its experts, Christopher T. De Rosa, after he informed FEMA there was no "safe level" of long-term exposure. They said FEMA bypassed that opinion and "shopped" the agency for its desired recommendation to study only short-term exposure.

"Any level of exposure to formaldehyde may pose a cancer risk, regardless of duration," De Rosa wrote in a Feb. 27, 2007, letter to a FEMA lawyer, recently obtained by a House Science and Technology investigative subcommittee that Miller chairs. "Failure to communicate this issue is possibly misleading and a threat to public health."

De Rosa wrote the letter after learning that the CDC bypassed his office to produce a Feb. 1, 2007, report for FEMA that did not consider long-term exposure risks, contradicting his recommendation to the agency in June 2006.

"Honest scientific studies don't start with the conclusion, and then work backwards from there," Miller said.

FEMA said the health agency's report last February did not address long-term health effects but rather concerned ways to avoid toxic exposure to formaldehyde. "FEMA did not suppress or inappropriately influence any report," agency spokesman James McIntyre said.

More than 40,000 trailers are still being used by families displaced by Katrina in August 2005 and Rita weeks later. FEMA announced last July that it would test occupied trailers, after congressional investigators disclosed that the agency had suppressed warnings for more than a year from its field workers about health problems experienced by Katrina survivors.

Tests on 500 trailers, finally begun last month, are being performed by CDC, the lawmakers noted. "The Committee is concerned about the independence and scientific integrity of any indoor air testing for formaldehyde levels in these trailers done under the auspices of FEMA," Miller and Samson wrote.

"For those who are too poor to live elsewhere, FEMA's position remains as it was in 2006: there are no possible adverse health effects that can't be cured by opening the windows," they added.