Image: Yahoo!

The Internet space has been competitive for years, and Yahoo! (NASDAQ: YHOO) has had trouble keeping up with some of its peers. Coming into Tuesday's fourth-quarter financial report, investors expected Yahoo! to suffer a big drop in earnings on marginal growth in revenue, and they weren't sure whether the company would be able to recover much of its lost profits in 2016. Yahoo!'s results included billions of dollars in impairment charges, and the Internet company also released strategic plans that involve layoffs and other big changes going forward. Let's take a closer look at how Yahoo! did and what could lie ahead for the company.

A big hit to the bottom line
Yahoo!'s fourth-quarter results included a number of extraordinary items that had a big impact on its overall performance. GAAP revenue rose 1.6% to $1.27 billion, and although costs of revenue jumped substantially compared to the previous year, the net number still outpaced what most investors were looking to see from the company. Similarly, Yahoo! posted a huge net loss of $4.44 billion, but on an adjusted basis, earnings of $0.13 per share matched the consensus forecast among investors.

Looking more closely at the numbers, several things stand out among Yahoo!'s results. First, the company took a $4.46 billion goodwill impairment charge, reflecting revised carrying values for its Tumblr, U.S. & Canada, Europe, and Latin America reporting units. The company blamed falling market cap and projected operating results for the impairment charge.

Also, Yahoo!'s core Mavens areas performed better than its other businesses. Mavens revenue climbed more than 25% from year-ago levels, compared to flat revenue from non-Mavens. That increased the share of Mavens sales to 39%, in keeping with the company's overall strategic plan.

Costs of revenue were dramatically higher. Amounts paid to search partners soared to $141 million for the quarter, bringing 2015's total to $465 million. Those figures include payments related to the agreement with Mozilla to provide Firefox users with Yahoo!'s search as a default.

Finally, Yahoo! has seen faster growth in the mobile realm, but not to the extent that investors would like. Mobile revenue jumped 15% to $291 million, compared to PC-based revenue growth of just7%. Still, mobile makes up less than a quarter of the company's total traffic-driven revenue.

Yahoo! also pointed to some interesting events during the quarter. The company presented the first live stream of an NFL game to global viewers, and it continued to use Tumblr to make inroads into the social networking space.

Yahoo!'s future plans
Still, Yahoo!'s quarterly report got overshadowed by its announcement of what it called an "aggressive strategic plan to simplify the company." The plan includes expense reductions, higher profits, and revenue growth in the mobile, video, native, and social arenas. Divestitures of non-strategic assets will also be a possibility, and the company said it would close offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan. The workforce reduction will amount to about 15%, which Yahoo! says is "necessary to position the Company for a stronger future."

In the long run, Yahoo! expects that emphasizing mobile in order to offset declines in its legacy business is the best course forward. The company hopes that by tapping into greater advertising spending, it can grow its overall business and boost profitability in the future.

Meanwhile, Yahoo! will continue working on its plans for a reverse spin of its holdings in Alibaba (BABA 2.92%). Separating the stake from its operating business is a key goal for Yahoo!, and Chairman Maynard Webb thinks that doing so in conjunction with these initiatives will maximize shareholder value.

Yahoo! shares didn't move dramatically in response to the news, falling 1% in after-hours trading following the announcement. The stock had been down substantially during the day but cut its losses dramatically following an early news report of the restructuring. With so much going on strategically, investors will be hard-pressed to make any firm conclusions about Yahoo!'s future until events take their course in the weeks and months to come.