Yahoo CEO: Strategic Process a Top Priority

Suitors for Yahoo Inc. got a reminder of the challenges facing the struggling Web business on Tuesday when it reported first-quarter results.

The company said revenue fell 11% to $1.09 billion, edging in above the $1.08 billion predicted by analysts. Yahoo posted a loss of 10 cents a share, compared with a year-earlier profit of 2 cents a share. On an adjusted basis, earnings were 8 cents a share, down from 15 cents a share a year earlier and higher than analysts' estimates of 7 cents.

Yahoo, which received preliminary bids from a handful of potential buyers on Monday, didn't offer new information about the process in its earnings release on Tuesday, which Chief Executive Marissa Mayer saying only that the company "made substantial progress towards potential strategic alternatives" during the quarter. The company didn't identify any of the bidders or disclose any further details about the auction process.

Yahoo is under pressure to show progress toward a sale by the time the company holds its annual shareholder meeting this summer, when investors will likely vote on Starboard Value LP's proposal to replace the entire nine-person board with a new slate of directors.

Verizon Communications Inc. was among a handful of firms expected to move ahead with a bid in time for the company's preliminary deadline, people familiar with the matter told The Wall Street Journal. Private-equity firms Bain Capital, TPG, Advent International, and Silver Lake are among the buyout firms who have expressed interest in a deal, people familiar with the process said.

Yahoo's ability to fetch a high price for its assets may be hampered by its declining performance. Revenue from its core business of display ads fell 0.8% to $463 million. Revenue from search ads, meanwhile, fell 9.3% to $491.9 million.

The company has worked to reduce costs by trimming staff and shuttering products, including seven digital magazines.

Yahoo is still losing ground to Alphabet Inc. and Facebook Inc. This year, Yahoo will claim 1.5% of the global market for online ads, down from a 2.4% share last year, estimates eMarketer Inc.

Shares rose 1.5% to $36.88 in after-hours trading.