Yahoo Inc. milked the recovering online advertising market and its new partnership with Microsoft Corp. to start the year with its best quarterly performance since hiring Carol Bartz to engineer a turnaround.
The first-quarter results released Tuesday marked Yahoo’s first revenue growth in 18 months, although the meager gain of 1 percent fell shy of management and analyst hopes. The company’s shares dropped by more than 3.5 percent in extended trading.
Earnings for the January-March period more than doubled as Yahoo began to reap the benefits from its plans to rely on Microsoft for its Internet search results and accompanying ads.
Although the transition won’t be done until next year, the savings and scheduled payments from the deal began to flow to Yahoo after U.S. and European regulators approved the alliance in February.
Microsoft’s net payments to Yahoo totaled $78 million in the first quarter. The company expects to get $75 million to $85 million per quarter from Microsoft for the rest of this year.
Yahoo also got a first-quarter boost from the January sale of an e-mail service.
“We delivered what I would call a solid quarter,” Bartz told analysts in a conference call.
Bartz, 61, became Yahoo’s CEO early last year after the company fell into a financial funk under its two previous leaders, former movie studio boss Terry Semel and company co-founder Jerry Yang.
While Yahoo’s fortunes sagged even more as the recession worsened last year, Bartz focused on cutting costs, forging the Microsoft partnership and polishing the company’s brand. The austerity measures helped lower Yahoo’s first-quarter operating expenses by 10 percent.
Yahoo earned $310.2 million, or 22 cents per share, in the first quarter. That compared with income of $117.6 million, or 8 cents per share, a year ago.
If not for one-time gains, Yahoo said it would have earned 15 cents per share. That figure…