Yahoo Earnings Surprise Wall Street

Yahoo earnings beat expectations as sales rose 9 percent to $1.8 billion and profits soared 282 percent to $542 million.

Yahoo!, Inc reported Q1 earnings that modestly beat expectations on Tuesday afternoon. The Internet advertising company said sales rose 9 percent to $1.8 billion and profits soared 282 percent to $542 million, or 37 cents per share, thanks to a one-time gain related to Yahoo's investment in a Chinese Internet company.

Yahoo's net income was 11 cents per share, two cents more than analysts had expected. Yahoo's first-quarter revenue was $1.35 billion, which was at the upper-end of the guidance Yahoo gave to Wall Street in January.

Analysts had expected first-quarter revenues to be $1.32 billion.

The strong earnings report could prompt Microsoft to raise its February 1 bid to buy Yahoo for $31 per share, although Microsoft CEO Steve Ballmer on Tuesday said the company had no intention of raising its bid based on Yahoo's first-quarter earnings.

Yahoo's shares, which fell a penny a share in regular trading to $28.54, fell another 3 cents after the earnings were published.