Yahoo, the largest U.S. web portal, reported earnings and sales that exceeded estimates as it benefited from growth in the online-advertising market under new CEO Scott Thompson.
First-quarter revenue, excluding sales passed on to partner sites, rose to $1.08 billion, Yahoo said in a statement today. That compares with the average $1.06 billion analyst estimate compiled by Bloomberg.
Mr. Thompson, who took over as CEO in January, announced job cuts and a reorganization earlier this month in a bid to increase profit and reverse a sales slump. Yahoo, while lagging rivals such as Google and Facebook, is benefiting as corporations devote more of their advertising dollars to the internet. The U.S. online-ad market grew 23% in the first quarter year-over-year, according to eMarketer.
"You should be able to get some benefit from the general ad spend," said Martin Pyykkonen, an analyst at Wedge Partners Corp. in Greenwood Village, Colo. "Advertising is still very good."
Yahoo stock had risen 1.5%, to $15.01 a share, at the close in New York; it has dropped 6.9% this year. First-quarter profit, excluding some items, was 24 cents, beating the average 17-cent analyst estimate compiled by Bloomberg. Net income attributable to the company rose to $286.3 million (23 cents a share) from $223 million (17 cents) a year earlier.
Second-quarter income from operations will be between $115 million and $195 million, Yahoo said, compared with the average $164.1 million forecast compiled by Bloomberg. Sales will be $1.03 billion to $1.14 billion, compared with the $1.08 billion projected by analysts.
Mr. Thompson, formerly the president of eBay's PayPal unit, earlier this month announced that Yahoo would cut about 2,000 jobs. Last week, he outlined a plan that organizes the company around consumers, geographic regions and technology. The consumer division will focus on media, commerce and so-called connections, which include web search and email, he said.
"Over the last 60 days, we've fundamentally rethought every part of our business," Mr. Thompson said last week in a letter to employees that was obtained by Bloomberg News.
Still, he's grappling with a planned proxy fight by investor Third Point, which owns about 5.8% of Yahoo. The investment firm is trying to get four nominees, including Third Point CEO Daniel Loeb, onto the company's board.
Yahoo added three new independent directors last month, after failing to reach an agreement with Third Point to seat some of the investor's picks on the board. Third Point, which had wanted Yahoo to address topics that included display advertising and management in connection with first-quarter results, said it must do more to drive growth.