Yahoo is still doing better as an investment house than as anInternet company. Its first-quarter earnings beat analysts' expectations, but much of the gain was from its investments abroad.
Since Marissa Mayer left Google to lead Yahoo nine months ago, the company's stock is up more than 50 percent, buoyed less by optimism in Yahoo than WallStreet's giddiness over Alibaba, the Chinese Internet company in which Yahoo retains a 20 percent stake.
Alibaba has signaled that it is preparing for an initial public offering that analysts predict could value it at $55billion to more than $120 billion, double to five times more than Yahoo's $26.2 billion market capitalization.
"If you own Yahoo for Alibaba, you're doing just great," said Colin Gillis, an Internet analyst at BGC Partners. "But if you own it for the core business, you'vegot some speed bumps."
On Tuesday the company reported that net income in the first quarter rose 36 percent to $390 million, or 35 cents a share, from the year-ago quarter. Wall Street analysts had expected net income of 24 cents a share.
But much of that was because of Alibaba. The income contribution from Yahoo's equity interests in Alibaba and Yahoo Japan was $217.6 million, well above its own first quarter operating income of $186 million.
Meanwhile, Yahoo's revenuewas down. The company said revenue was $1.14 billion, down 7 percent from the year-ago quarter. Excluding traffic acquisition costs, revenue was flat at$1.07 billion. That news sentYahoo's stock down about 4 percent in after-hours trading, after closing at$23.79 on Tuesday.
Yahoo reported first-quarterearnings at a critical juncturefor Ms. Mayer. Investors are eager to see whether she can increase revenues, which have languished in an increasingly competitive landscape.
