POSTED: Wednesday, April 17, 2013 - 2:00am
UPDATED: Wednesday, April 17, 2013 - 2:04am
NEW YORK (CNNMoney) — Yahoo reported a first quarter profit that far exceeded Wall Street's expectations, but the company's sales were a disappointment.
Investors weren't pleased. Shares of Yahoo fell 4 percent in after-hours trading.
The Sunnyvale, Calif.-based Internet giant said Tuesday that its net income rose 36 percent to $390.9 million in the first quarter.
Results included a one-time charge of 3 cents per share. Without the charge, Yahoo earned 38 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, had forecast earnings of 24 cents per share.
Sales fell 7 percent to $1.1 billion. Excluding advertising sales that Yahoo shares with partners, a figure also known as traffic acquisition costs, the company reported revenue of $1.07 billion, which just missed analysts' forecasts of $1.1 billion.
CEO Marissa Mayer said the company's newly redesigned products were helping Yahoo stabilize its business.
"We are moving quickly to roll out beautifully designed, more intuitive experiences for our users," she said, in a prepared statement. "I'm confident that the improvements we're making to our products will set up the company for long-term growth."
Yahoo recently unveiled a new homepage, a redesigned Yahoo Mail and a refreshed Flickr service. All were designed to increase user engagement.
Search ad revenue rose by 6 percent, but that was overshadowed by the 11 percent decline in display ad revenue (banners and video ads). Each of those segments makes up about 40 percent of Yahoo's overall business.
Yahoo rivals Google and Microsoft are set to report their earnings on Thursday. Apple will report its financials on April 23.