Yahoo, the biggest U.S. Web portal, also forecast sales that fell short of analysts' estimates as it continued to lose advertisers to Google and Facebook.
Second-quarter sales, excluding revenue passed to partner sites, will be as much as $1.09 billion, Sunnyvale, Calif.-based Yahoo said today on its website. Analysts on average had projected revenue of $1.11 billion, according to data compiled by Bloomberg.
Though net income soared 36 % in the first quarter, Yahoo reported that sales of display ads decreased 11% and search revenue, excluding sales passed to partner sites, dropped 10% to $425 million.
CEO Marissa Mayer is struggling to boost marketing revenue as customers shun Yahoo's banner ads in favor of lower-priced, targeted promotions offered by Google and Facebook, according to Brian Wieser, an analyst at Pivotal Research Group. Yahoo's share of the U.S. market will shrink to 7.7% this year, from 9% in 2012, predicts researcher eMarketer.
"We don't see any meaningful signs of a turnaround," Mr. Wieser wrote in a research report. He has a hold rating on the shares with a $26 target price.
First quarter net income attributable to Yahoo increased 36 % to $390.3 million, or 35 cents a share, from $286.3 million, or 23 cents, a year earlier, the company said in a statement.
Google will retain its lead in the U.S. display-ad market this year with an 18% share, while Facebook will have 16%, according to eMarketer.
Yahoo is revamping its web properties and creating new mobile services to court users who rely on smartphones and tablets to go online. Ms. Mayer has said she's working to help consumers on the go perform daily tasks like checking stock quotes or sports scores.
Ms. Mayer is using small acquisitions of mobile-software startups as a way to reignite growth and add talent. Yahoo has purchased at least six startups -- Stamped, OntheAir, Snip.it, Alike, Jybe and Summly -- since Mayer assumed the CEO post in July. -- Bloomberg --