The Sunnyvale-based company said Tuesday that it earned $542.2 million, or 37 cents per share, more than triple its profit of $142.4 million, or 10 cents per share, at the same time last year.
Most of the first-quarter improvement stemmed from a non-cash gain of $401 million recorded to recognize Yahoo's stake in the parent company of Alibaba.com, a leading e-commerce site in China that went public last year.
Differencing out the increase in earnings that resulted from Alibaba.com, it seems that Yahoo's earnings would be similar to the company's 1Q earnings last year.
Earlier this month, reports indicated that Yahoo's first quarter earnings would be a crucial factor in negotiating better offer from Microsoft:
The fate of the No.2 Internet shop is largely sealed as Microsoft closes in. But Yahoo can hope for a higher price if its business is strong. "We think Yahoo's only escape from Microsoft's ultimatum is to have posted a strong first quarter and raise its outlook for the rest of the year," writes Henry Blodget on Silicon Alley Insider.
However, while providing some leverage, Yahoo's positive performance may not be sustainable... it is important to note that the company has not increased its revenue forecast for the rest of the year. Additionally, Yahoo's performance and growth continues to trail it's major competitor, Google. On Microsoft's end, the company has maintained a hard line stance, and it remains to be seen how Yahoo's current performance will change things. Microsoft had previously given Yahoo until Saturday to accept it's current offer (or face a proxy battle).
At the very least, Yahoo has shown that it is still a force to be reckoned with... but a takeover by Microsoft still seems inevitable. Most analysts predict that Microsoft will likely sweeten its deal... but it's still unclear how the two companies will negotiate the merging of their "disparate cultures and technologies".
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