Oct. 25 (Bloomberg) -- Yahoo Japan Corp., operator of the nation's most visited Web site, plunged the most in 21 months in Tokyo trading after its first quarterly profit decline prompted at least four analysts to downgrade the stock.

Yahoo Japan shares fell by the daily limit of 5,000 yen, or 8.9 percent, to 50,800 yen at the close on the Tokyo Stock Exchange, making it the second-largest decliner on the Morgan Stanley Capital International World Index. That was the biggest drop for shares of the Tokyo-based company since January 2006.

The company yesterday said net income fell 4 percent to 13 billion yen ($114 million) in the quarter ended Sept. 30 because of a charge to write down a stake in ValueCommerce Co., an Internet consulting company. The profit decline is Yahoo Japan's first since it started reporting quarterly consolidated earnings in 2002, according to data compiled by Bloomberg.

``Yahoo has not made effective use of its resources'' to bolster its competitiveness, Takayoshi Koike, an analyst at Deutsche Securities in Tokyo, wrote in a report today. Growth in the company's existing businesses will ``slow significantly'' from the year starting April 2008, according to the analyst.

Koike, who cut the rating on Yahoo Japan to ``sell'' from ``hold,'' forecast operating profit will rise 13 percent to 140.5 billion yen for the 12 months starting April 2008, slowing from 17 percent growth a year earlier.

Goldman Sachs Group Inc. cut its rating to ``neutral'' from ``buy,'' according to a report today, while JPMorgan Securities Japan Co. reduced its recommendation to ``neutral'' from ``overweight.''

Akie Kikuchi, a spokeswoman for Yahoo Japan, declined to comment on the analyst reports.

Softbank Stake

Yahoo is 41 percent owned by Softbank Corp., the nation's least profitable mobile-phone operator, and 33 percent held by Sunnyvale, California-based Yahoo Inc.

Softbank, Japan's third-biggest wireless-phone company, includes a button on its handsets that connects users directly to Yahoo Japan's Web site.

Yahoo Japan's mobile-phone portal is ``finally'' at the break-even level, Chief Executive Officer Masahiro Inoue said yesterday, without providing details.

Shares of Softbank fell 4.5 percent to 2,460 yen, while the benchmark Nikkei 225 Stock Average dropped 0.5 percent.

To contact the reporters on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net

Last Updated: October 25, 2007 04:43 EDT