Shares in Yahoo fell 12% in after-hours trading on Tuesday, after its results failed to meet market expectations.
Yahoo has previously seen stellar profits growth
The web giant made a post-exceptionals net profit of $247m (£140m) or 16 cents a share for its fourth quarter, below Wall Street's predicted 17 cents.
Overall net income for the last three months of 2005 shot up 83% to $683m compared to a year earlier.
But the figures were aided by a one-off gain, Yahoo's taking a 40% stake in Chinese firm Alibaba.com.
Yahoo's fourth-quarter revenues were up 39% to $1.5bn.
Computer sector analysts said the results were disappointing and would more than likely have a negative knock-on effect on the wider internet sector.
Google's shares dropped 2.5% in Tuesday post-close trading.
"It's a miss versus expectations. I would expect both Yahoo and Google to sell off," Scott Devitt, an analyst with brokerage Stifel, Nicolaus & Co, said.
Yahoo's underlying profit growth was aided by the continuing migration of advertising to the internet from more traditional media sectors such as print.