Yahoo sales sag with mixed results in ads

The company reported an increase in search revenue, with flat results in display

Yahoo's quarterly earnings results for the first quarter of 2014.

Yahoo's quarterly earnings results for the first quarter of 2014.

In an indication that CEO Marissa Mayer is not yet seeing dramatic results from her efforts to turn the company around, Yahoo's sales dipped slightly in its first quarter, amid some gains in its search advertising business.

Revenue for the quarter ended March 31 was US$1.13 billion, Yahoo reported Tuesday, down 1 percent from the same period last year. Excluding traffic acquisition costs, revenue for the quarter rose by 1 percent, to roughly $1.09 billion, just beating expectations of analysts polled by Thomson Reuters.

Mayer said she was pleased by the company's revenue. The quarter, she maintained in the company's announcement, "was an early and important sign of growth in our core business."

The company's quarterly net earnings, however, dropped by 20 percent to $312 million. Net earnings per share for the quarter were $0.29, down 17 percent.

On a non-GAAP basis, which excludes certain expenses, Yahoo's net earnings per share were $0.38, slightly beating analysts' expectations of $0.37.

Since taking the helm as CEO in 2012, Mayer has sought to turn Yahoo around through a string of acquisitions, redesigned products and new content verticals. Major gains in advertising have proven elusive, but Tuesday's earnings point to some new life in those areas.

Yahoo's search revenue for the quarter rose by 5 percent to $445 million. Last quarter, Yahoo reported a 4 percent drop in search ad revenue. Search is an area in which Yahoo wants to break new ground, Mayer has said, though the company is hampered to a degree by its deal to use Microsoft's Bing search engine.

Yahoo's display revenue, however, was flat at $453 million for the quarter. And while the number of display ads sold increased by 7 percent, Yahoo said, the price per ad decreased by 5 percent.

In mobile, meanwhile, Yahoo reported a modest gain in users, to 430 million monthly users, up from 400 million reported earlier this year. Yahoo has struggled, however, to significantly monetize its services on mobile. In January the company said its revenue from mobile products was still not material to its business.

Yahoo's stock was trading at $34.21 in after-hours trading on Tuesday, up slightly from its close of $33.45 on Monday.

Mayer and Yahoo Chief Financial Officer Ken Goldman will discuss the company's results in a conference call with analysts.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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