Yahoo misses Wall Street's Revenue and Profit Forecasts

Internet search and content company Yahoo has reported its first quarter earnings and revenue, which missed Wall Street's revenue and profit forecasts. Small growth in the company's online advertising businesses was overshadowed by its higher payments to websites which sends traffic to Yahoo.

The company's first quarter results missed profit forecasts, but still its share rose about 1.4% to about $45.10 in extended trading. The share rose after president and Chief Executive Officer of Yahoo Marissa Mayer said that the company had appointed some advisers to determine the most promising opportunities for its stake in Yahoo Japan.

Investors have been urging Marissa Mayer to cash in the stake, after the company announced plans to spin off its position in Chinese e-commerce Company Alibaba Group Holding. Activist shareholder Starboard Value LP, which has about 1% stake in Yahoo, urged Mayer to spin off the Yahoo Japan stake to lift the company's stock. The moves follow unsuccessful efforts by the CEO to revive significant revenue growth.

The Sunnyvale, California headquartered search engine company announced that for the first quarter, the company's advertising revenue rose more than 2% to about $463.7m. The advertising revenue has been accounting for about 40% of Yahoo's total revenue. According to the company, its search business revenue rose about 19.5% year-on-year to $531.7m.

The company has also paid to partner websites that sends readers to Yahoo. After deducting fees paid to them, Yahoo's total revenue fell to about $1.04bn from $1.09bn.

Yahoo said, "Recent deal to become the default search engine on Mozilla's popular Firefox browser boosted search volume. But the cost of the deal, which Yahoo did not disclose, contributed to a sharp $137m rise in traffic acquisition costs." According to the company, its display and search revenue fell after factoring in those costs.