) --



posted a drop in first-quarter earnings and sales on Tuesday, but the stock jumped 2.8% in after-hours trading Tuesday as the embattled Internet giant narrowly beat analyst expectations.

The Sunnyvale, Calif.-based firm posted adjusted earnings of $223 million, or 17 cents per share, compared with $310 million, or 22 cents per share, during the same period last year. Revenue fell 6% to $1.06 billion.

Analysts had expected adjusted earnings of 16 cents per share on revenue of $1.06 billion.

"We are solidly executing toward our plan for returning Yahoo! to sustainable revenue and profit growth," CEO Carol Bartz said in a press release.

Hired two years ago to restructure Yahoo! after several years of sluggish growth, Bartz has focused primarily on cutting costs through layoffs and the shutting down of non-core businesses like search site AltaVista.

In 2009, Bartz inked a deal with


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to power Yahoo!'s search business, but the transition has taken longer than expected. Yahoo! has said it won't see benefits from the partnership until the second half of this year.

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Search revenue excluding traffic and acquisition costs fell 19% to $357 million.

Yahoo's display business, an area that has faced mounting competition from


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, grew 10% to $471 million excluding traffic and acquisition costs, in line with analyst expectations.

Going forward, Yahoo! expects second quarter revenue of $1.075 billion to $1.125 billion. Analysts were expecting revenue of $1.1 billion.

--Written by Olivia Oran in New York.

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