Yahoo last night reported an improvement in revenue that marked its first quarterly sales growth in three years.
New chief executive Scott Thompson outlined his plan to revamp the struggling web company.
He announced moves to shut down underperforming online properties, while making online commerce and mobile products a bigger part of the business.
He said the moves were "the first steps" to regain market share from online rivals and revive the company's growth.
"I'm convinced that we don't need to reinvent who we are," Thompson said during a conference call with analysts last night. "But I'm equally convinced we absolutely do need to reinvent the experiences our users have with the marquee properties that bring them to Yahoo every day," he added.
Thompson also said that Yahoo was once more exploring ways to "monetise" some of its stake in China's Alibaba Group. The comments marked the most extensive details Thompson has provided about his strategy since taking the top job at Yahoo in January.
But the former PayPal president faces a high wall of skepticism from investors who have watched several failed attempts to restructure and revitalise the one-time Web pioneer in recent years. Carol Bartz, Thompson's immediate predecessor, was fired over the phone in September.
Yahoo said its net income grew 28% in the three months to the end of March to $286m, or 23 cents a share, outpacing Wall Street expectations of 17 cents a share.
Much of the increase in quarterly profit came from Yahoo's earnings in equity interests, which more than doubled year-on-year and comprise mainly its investments in Alibaba as well as Yahoo Japan.
Yahoo's plans for its Asian assets are being closely watched by investors, many of whom have argued that Yahoo should sell all or part of its holdings in the companies. Thompson told analysts that Yahoo was exploring a simpler deal to try and "monetise" its 40% slice of China's Alibaba, a stake valued at billions of dollars and that Yahoo once discussed unloading in a complex tax-efficient transaction.
Thompson did not elaborate, but his comments suggest the company - which broke off deal talks with Alibaba and Softbank last year - was willing to go back to the negotiating table. He said that returning cash to shareholders, in the event of such a deal, would be at the "top of the list" of priorities.
Yahoo's partnership with Microsoft Corp is also a work in progress. The 10-year search deal that the two companies entered into in 2009 has not performed up to expectations. Thompson said he was personally working with Microsoft to improve the payoff from the companies' search partnership.
Even so, Yahoo said that better than expected performance for its search ads helped the company increase its quarterly net revenue year-on-year for the first time since the third quarter of 2008. Yahoo's core display advertising business declined 4% during the first quarter.
The company's net revenue, which excludes payments to partners, totaled $1.077 billion in the first quarter, compared to $1.064 billion the same time last year. The company forecast net revenue in the second quarter of between $1.03 billion and $1.14 billion.
Once one of the web industry's pioneering companies, Yahoo has seen its growth stunted in recent years amid competition from Google Inc and Facebook. Thompson, the former president of PayPal who took the reins in January, announced plans this month to lay off 14% of Yahoo's staff and reorganise the management structure.
He said last night that Yahoo is shutting down or "transitioning" roughly 50 properties that do not contribute meaningfully to user engagement or revenue. As part of the reorganisation, Thomson created a new "commerce" group which will initially consist of existing Yahoo online properties such as property and car listings.
