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By Alexei Oreskovic
SAN FRANCISCO, April 15 Yahoo Inc
barely managed to expand its core advertising business in the
first quarter despite Chief Executive Marissa Mayer's two-year
effort to revive growth at the Internet pioneer.
Mayer told analysts on a Tuesday conference call she
believed the company had been through the worst and had now
entered a period of stable but modest growth.
Yahoo expects second quarter revenue, excluding traffic
acquisition costs, of $1.06 billion to $1.1 billion, in line
with Wall Street's expectations for about $1.08 billion.
Still, Yahoo's shares leaped 8 percent on strong results
from Alibaba Group Holding Ltd, the Chinese e-commerce company
in which it owns a 24 percent stake, ahead of its highly
anticipated initial public offering.
Mayer is trying to revitalize Yahoo's business. The former
Google Inc executive revamped many of Yahoo's
Web products but its ad sales business continues to struggle,
while rivals such as Google, Facebook Inc and Twitter Inc
post strong revenue growth.
Revenue from display ads, which account for roughly 40
percent of Yahoo's overall sales, increased just 2 percent
year-on-year to $453 million, excluding partner fees. That
meager growth follows several consecutive quarters of decline in
the display ad business.
Shares of Yahoo were up at $36.90 in after hours trading.
"It's really Alibaba driving things," said Macquarie
Research analyst Ben Schachter. Yahoo's core business improved
slightly in the first quarter, but "really the story here is
Alibaba and the somewhat unexpected re-acceleration" of its
The Chinese company's revenue increased 66 percent to $3.06
billion in the fourth quarter, according to slides that Yahoo
posted on its investor relations website on Tuesday, faster
than the 51 percent growth in Alibaba's third quarter.
Yahoo reports the Chinese company's financial results one
quarter later than its own.
Alibaba, valued at more than $140 billion, is expected to go
public later this year in the United States in the largest IPO
since Facebook Inc's debut in 2012.
Yahoo's revenue, excluding fees paid to partner websites,
came to $1.087 billion in the first quarter, up from $1.074
billion in the year-ago period. Analysts polled by Thomson
Reuters I/B/E/S had expected adjusted revenue of $1.077 billion.
It had net income of $311.6 million, or 29 cents a share, in
the first quarter. It earned 38 cents a share excluding certain
(Reporting by Alexei Oreskovic; Editing by Alden Bentley and