Yahoo reports modest revenue growth in first-quarter, shares rally

SAN FRANCISCO (Reuters) - Yahoo Inc delivered modest revenue growth in the first quarter but its shares jumped on strong results from Alibaba Group Holding Ltd ahead of the Chinese e-commerce company's highly anticipated initial public offering.

Shares of Yahoo were up roughly 8 percent to $36.90 in afterhours trading on Tuesday.

Yahoo said its revenue, excluding fees paid to partner websites, was $1.087 billion in the first quarter, up from $1.074 billion in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S had expected adjusted revenue of $1.077 billion.

Revenue from display ads, which account for roughly 40 percent of Yahoo's overall revenue, increased 2 percent year-on-year to $453 million excluding partner fees. The modest increase follows several consecutive quarters of decline in Yahoo's display ad business.

Yahoo, which owns a 24 percent stake in Alibaba, had net income of $311.6 million, or 29 cents a share, in the first quarter. It earned 38 cents a share excluding certain items.

Alibaba's revenue grew 66 percent to $3.06 billion in the 2013 fourth quarter, according to slides that Yahoo posted on its investor relations website on Tuesday. Yahoo reports the Chinese company's financial results one quarter later than its own.

Alibaba, valued at more than $140 billion, is expected to go public later this year in the United States in the largest IPO since Facebook Inc's debut in 2012.

(Reporting by Alexei Oreskovic; Editing by Alden Bentley and Richard Chang)