Yahoo's Q1 profit $542M on Alibaba gain

Yahoo Inc. on Tuesday reported first quarter net income of $542 million, or 37 cents a share, up from $142 million, or 10 cents a share in the same period last year, but that included a non-cash gain of $401 million related to the IPO ofAlibaba.com, in which Yahoo holds a stake.

Sunnyvale-based Yahoo (NASDAQ:YHOO) reported revenue of $1.8 billion, a 9 percent increase over the year-ago quarter's $1.7 billion.

The company took a $29 million charge for severance pay expenses and related cash expenditures related to a strategic workforce realignment during the quarter. Offsetting that was a $12 million credit related to stock-based compensation expense reversals, resulting in a net total strategic workforce realignment charge of $17 million.

Content Continues Below

Revenue excluding payments made to other Web sites to acquire traffic rose to $1.35 billion. Excluding items, the company's income would have been $150 million, or 11 cents a share, compared to non-GAAP net income of $154 million or 11 cents a share for the same period of 2007.

Yahoo beat analysts' estimates, which saw earnings of 9 cents a share on $1.32 billion in revenue.

CEO Jerry Yang said the company is "beginning to realize the benefits of the very substantial and deliberate long-term investments we've made."

Better than expected results would likely have strengthened Yahoo's position as it tries to fend off Microsoft Corp. (NASDAQ:MSFT). Yahoo has rejected Microsoft's takeover offer, which was initially valued at $44.6 billion.

Redmond, Wash.-based Microsoft's CEO Steve Ballmer, however, said "I wish Yahoo all the success with its results but it doesn't affect the value of Yahoo to Microsoft."