Internet giant Yahoo! (YHOO) posted a drop in profit in the third quarter and announced plans to lay off at least 10% of its 14,000-person work force.

The company also lowered its full-year revenue outlook.

The latest layoffs, which the company said was in effort to control costs, come on top of the 1,000 job cuts reported in January. Shares of the company traded up 8% in after-hours trading on the news.

The struggling Web portal said net income fell to $54.3 million, or four cents a share, from $151.3 million, or 11 cents a share, in the same period a year ago.

The the Silicon Valley-based company posted a third-quarter revenue of $1.79 billion, analysts had been forecasting net revenue to be around $1.37 billion. Operating income came in at $70 million for the quarter.

"As economic conditions and on-line 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! co-founder and chief executive officer, said in a statement.

Investors are becoming increasingly inpatient with the company after it snubbed Microsoft’s (MSFT) unsolicited takeover offer of $33 a share. 

Yang has struggled to maintain investor confidence since spurning Microsoft’s offer, with 34% of the shareholders wanting to cut him from the board during its annual meeting in August.

In an attempt to boost cash flow, Yahoo reached a deal to allow archrival Google (GOOG) to put search ads on its site. The deal still faces antitrust approval from the Department of Justice.

Yahoo’s stock has shed more than 40% in the past three months and was hovering near five-year lows at $12.18 earlier in the trading day.