Yahoo on Tuesday reported a 64% decline in profits and said it planned to lay off at least 10% of its staff -- about 1,500 employees -- in the coming months.

The company's third-quarter revenue came to $1.8 billion, a 1% increase from the same period in 2007. Its net income in the third quarter was $54 million, down from $151 million during the same period last year.

"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," Yahoo CEO and co-founder Jerry Yang said in a statement. "We have been disciplined about balancing investments with cost management all year, and have now set in motion initiatives to reduce costs and enhance productivity.

"The steps we are taking this quarter should deliver both near-term benefits to operating cash flow, and substantially enhance the nimbleness and flexibility with which we compete over the long term," Yang's statement continues. "We enter this slowing market with competitive advantages as the destination of choice for consumers and as a leader in providing online advertisers with the broadest set of advertising management tools and products in the industry. We plan to continue building on those strengths."

Earlier this year, Yahoo rejected an acquisition offer from Microsoft priced at $33 per share. Its stock closed Tuesday at just over $12 per share.

Last week, Microsoft CEO Steve Ballmer acknowledged the possibility that his company might be willing to resume discussions with Yahoo, but Microsoft subsequently issued a statement saying that Microsoft had no interest in acquiring Yahoo and that no such talks were under way.

Further clouding Yahoo's future is the uncertainty that looms over the company's theoretically profit-boosting ad partnership with Google. The two search companies have twice extended the implementation date of their ad deal, though they remain hopeful that they can convince the U.S. Department of Justice that no antitrust intervention is necessary.