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 / Updated  / Source: Reuters
By Reuters

Yahoo's first-quarter results beat Wall Street estimates by a hair but revenue dropped 11.3 percent, as the web-pioneer struggled to boost growth in the core online search and display advertising business that is in the processing of auctioning off.

Yahoo! Chief Executive Marissa Mayer speaks during a Startup Battlefield session at TechCrunch Disrupt SF 2012 at the San Francisco Design Center Concourse in San Francisco, California September 12, 2012. REUTERS/Stephen Lam

Revenue fell to $1.09 billion in the first quarter ended March 31, the first decline after four straight quarters of growth. Analysts on average had expected revenue of $1.08 billion, according to Thomson Reuters.

On an adjusted basis, it earned 8 cents per share. Analysts were expecting earnings of 7 cents.

"Given all the challenges Yahoo has faced with the reduction of its workforce and the Alibaba spinoff plan, to come in and deliver these numbers is a very positive thing," JMP Securities analyst Ronald Josey said.

The company's shares rose nearly 1 percent to $36.66 in light volumes in extended trading on Tuesday.

Under pressure from activist investors, Yahoo launched the auction of its core business in February after shelving plans to spin off its stake in Chinese e-commerce giant Alibaba Group Holding Ltd. It has also said it could spin off the business.

The first round of bids for interested parties closed on Monday, according to media reports. Verizon Communications Inc is reportedly the favorite to win the auction and YP Holdings, formerly known as, is the latest firm to express interest.

Time, Alphabet, Comcast, AT&T, and IAC/Interactivecorp stepped out of contention prior to Monday’s deadline to submit bids, according to a Dow Jones report.

But if activist investor Starboard Value LP has its way, Yahoo's Chief Executive Officer Marissa Mayer and her entire management team will be pushed out in favor of a board of its choosing to conduct the sale process. Starboard, which owns 1.7 percent of Yahoo, announced last month it will push for a proxy fight during Yahoo’s annual meeting, expected to take place in June.

Yahoo gave few details in its earnings statement Tuesday but said it considers the strategic alternatives process "... a top priority."

Yahoo said it sees second-quarter GAAP revenue of $1.05 billion to $1.09 billion - below analysts' view of $1.10 billion.

Murali Sankar, Boenning & Scattergood Inc analyst said the company is meeting its guidance mostly because it has lowered its own expectations for the future - a trend he expects to continue.

"It looks like they're doing the same thing for the second quarter, setting themselves up for hopefully another beat. You could argue that they're maybe being a little conservative," he said.

In her nearly four years as Yahoo's CEO, Mayer has made little progress in her attempts to win back market share from bigger internet players such Facebook Inc and Alphabet Inc's Google.

Mayer’s attempts to gain market share included the $1.1 billion acquisition of social blogging site Tumblr and the MAVENS strategy - a shift towards promoting mobile, video, native and social networking advertising products.

The internet company's revenue peaked in 2008 and while it still runs some of the world's most-read websites, it has been unable to keep up with Google and Facebook in the battle for online advertisers.