Yahoo revenue down to just over $1bn in disappointing first quarter results
Yahoo has missed Wall Street's revenue and profit forecasts as slight growth in its online advertising businesses was outweighed by higher payments to partners and websites which send readers to Yahoo.
But Yahoo shares rose about 1.4pc to $45.10 in extended trading after Chief Executive Marissa Mayer said the company had hired advisers to determine the "most promising opportunities" for its stake in Yahoo Japan.
Investors have been urging Mayer to cash in the stake, after Yahoo announced plans to spin off its position in Chinese internet retailer Alibaba Group Holding.
The moves follow unsuccessful efforts by Mayer to revive meaningful revenue growth with a string of acquisitions and product revamps.
For the first quarter, Yahoo said display advertising revenue rose 2.3pc to $463.7m, accounting for roughly 40 percent of its total revenue. Search business revenue was up 19.5 percent year-on-year to $531.7m.
Total revenue, after deducting fees paid to partner websites, fell to $1.04bn from $1.09bn.
Yahoo said its 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. Both display and search revenue fell after factoring in those costs.