Yahoo shows signs of life, Alibaba in the cards again

Tue Apr 17, 2012 6:27pm EDT
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By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Yahoo Inc reported an uptick in revenue that marked its first quarterly sales growth in three years, as new Chief Executive Scott Thompson spearheads the latest attempt to revamp the struggling Web company.

Thompson told analysts on a conference call that Yahoo was once more exploring a simpler deal to try and "monetize" its 40 percent slice of China's Alibaba, a stake valued at billions of dollars and that Yahoo once discussed unloading.

Thompson did not elaborate, but his comments suggest the company -- which broke off deal talks with Alibaba and Softbank last year -- was willing to go back to the negotiating table.

Analysts pointed out that much of the increase in quarterly profit came from Yahoo's earnings in equity interests, which more than doubled year-on-year and comprise mainly its investments in Alibaba as well as Yahoo Japan.

"Their minority stake in their investments is generating more profit than their core business," said BGC Partners analyst Colin Gillis. "Here is the one piece that is always sad about Yahoo. Their income from operations was about $169 million and their earning and equity interest was about $172 million."

The core business beyond China and Japan looked mixed.

Finance chief Tim Morse told Reuters in an interview that better-than-expected pricing for its search ads helped the company increase its quarterly net revenue year-on-year for the first time since the third quarter of 2008.

But its core display advertising business declined 4 percent during the first quarter.   Continued...

Yahoo Inc. offices, housing its Search Marketing Group, are pictured in Burbank, California, in this October 14, 2010 file photograph. Yahoo Inc said it earned net income of $286 million, or 23 cents a share, in the first quarter. The Internet company reported net revenue, which excludes fees paid to partners, of $1.077 billion, compared to $1.064 billion in the year-ago period. REUTERS/Fred Prouser/Files