Marissa Mayer, chief executive officer of Yahoo! Inc., pauses during a session on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Friday, Jan. 24, 2014. World leaders, influential executives, bankers and policy makers attend the 44th annual meeting of the World Economic Forum in Davos, the five day event runs from Jan. 22-25. Photographer: Jason Alden/Bloomberg *** Local Caption *** Marissa Mayer

San Francisco - Yahoo posted a stronger-than-expected first-quarter profit on Tuesday, results hailed by chief executive Marissa Mayer as showing growth in the online giant’s “core” business.

The internet company said it earned $312 million (R3 billion) on revenue of $1.1bn, topping most analyst forecasts.

Profit was down 20 percent from a year ago with revenues nearly flat amid major shifts being made under Mayer, a former Google executive.

“If you look at our core businesses, which we define as search and display, you see an important shift,” Mayer said. “Our search revenue grew 9 percent year over year, marking our ninth consecutive quarter of growth.”

She said Yahoo’s mobile service was attracting more than 430 million monthly users.

Yahoo shares vaulted higher by 6.7 percent to $36.50 in after-hours trade on Tuesday following the release.

Victor Anthony at Topeka Capital Markets said the revenue was better than expected and he was “cautiously optimistic on the core” outlook.

Under Mayer, Yahoo has been revamping many of its offerings while emphasising mobile services and using cash for a series of acquisitions. It is also moving more into video, with plans for original television programmes in the works.

Mayer said the company was making headway in boosting mobile business, in terms of search and in apps, which have leading positions on mobile platforms such as Apple’s iOS and Google Android.

Yahoo is also a key shareholder in Chinese web giant Alibaba, which is in the process of launching an initial public offering (IPO) in the US. After a listing, Yahoo, an early investor in Alibaba, has the right to sell its remaining shares.

The Chinese firm has not released details on its financing, but Yahoo’s figures showed Alibaba with a profit of $1.35bn on $3bn in revenues in the fourth quarter of last year. The IPO is expected to be the largest in the tech space since Facebook’s in 2012, with Alibaba’s value estimated at $150bn.

Yahoo has a 24 percent stake in Alibaba, and is expected to sell around 10 percent of the capital at the time of the IPO.

Anthony said that in view of Alibaba’s growth, he recommended buying Yahoo shares. “We continue to recommend aggressive purchase of the shares ahead of the Alibaba IPO. We expect an IPO filing in a few weeks.”

Research firm eMarketer said Yahoo’s share of worldwide digital ad revenues fell to 2.9 percent last year from 3.4 percent in 2012. Facebook and Google boosted their positions. Yahoo’s share will decrease further this year, the research firm estimates. Its share of US digital ad revenues dropped to 5.8 percent last year from 6.8 percent in 2012, eMarketer said. - Sapa-AFP