Struggling Yahoo! sees profit rise

Struggling Internet pioneer Yahoo! on Tuesday saw its faltering stock price bolstered by news that its profit climbed 28 percent in the first three months of the year. The California-based firm reported net income of $286 million on revenue just shy of $1.08 billion in the quarter. Yahoo! shares jumped more than two percent on the news, quickly hitting $15.35 a share in after-market trade. "In the first quarter, Yahoo!'s results came in at the high end of our guidance range and beat consensus on revenue and profits," said chief executive Scott Thompson. "We also made changes to resize the organization and establish a new leadership structure to quickly deliver the best user and advertiser experiences at scale." Thompson has been under pressure to lay out how he plans to return Yahoo! to its former glory. Yahoo! this month said it would slash some 2,000 jobs in a purge aimed at transforming into a "smaller, nimbler, more profitable" company. Thompson, who took the helm in January promising to turn the company around after a year of falling income, said the job cuts were a "tough decision." "We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities," Thompson said in a statement. While Thompson did not share details on the company's "core values" that are now in focus, they appeared to involve publishing online content tailored to tastes of website visitors. Yahoo! has been trying to re-invent itself as a "premier digital media" company since the once-flowering Internet search service found itself withering in Google's shadow. As the company has strived for a new identity it has seen an exodus of talent that commenced during a failed bid by technology giant Microsoft to buy Yahoo! four years ago for about $45 billion. The Internet firm's share of US online ad revenues sank to 9.5 percent last year from 15.7 percent in 2009 and will drop further this year, according to eMarketer. Social networking giant Facebook is becoming the preferred venue for display advertising key to Yahoo! revenue while Google's dominance in search advertising strengthens, eMarketer indicated. Yahoo! relies on Microsoft's Bing search engine to handle queries at its websites, customizing results for users. The 17-year-old company based in Sunnyvale, California, had more than 14,000 employees at the end of 2011. Yahoo! has filed a US lawsuit accusing Facebook of infringing on 10 of its patents. That tactic ran into headwind when Facebook fired back at Yahoo! with a countersuit charging that the faded Internet star is violating the social network's patents -- not the other way around. Thompson, formerly head of mobile payments firm PayPal, became chief executive after months of turmoil at Yahoo!, including deadlocked talks over possibly selling off the company's valuable assets in China and Japan. Two weeks after Thompson was recruited, Yahoo! co-founder and former chief executive Jerry Yang resigned from the board of directors. A few weeks later the chairman and three other directors said they would step down, opening the way for Thompson's agenda.