Yahoo Q1 Earnings: Profits Rise, Display Advertising Grew 20 Percent

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Yahoo reported first quarter earnings today, with revenues rising a paltry 1 percent from the first quarter of 2009 to $1.6 billion. Income from operations for the first quarter of 2010 was $188 million, compared to $101 million in the first quarter of 2009. Net income came in at $310 million for the quarter compared to $118 million in the first quarter of 2009.

Yahoo grew display advertising revenue by 20% year over year, driven by guaranteed display advertising, which grew by 24% year over year. Cash flow from operating activities was $144 million, a 45 percent decrease compared to $262 million for the same period of 2009.

Yahoo’s CEO Carol Bartz said in the call that earnings were strong, and the rise in display advertising represented the return of large advertisers. Bartz says Yahoo is continuing to enhance its ad platform, and will be investing “a couple hundred million” in its advertising and search technologies.

Yahoo’s saw a rise in profit after the sale of Zimbra to VMware and from reimbursements from Microsoft following the search and advertising deal Yahoo entered with the company last year. Zimbra represented a $66 million gain. The results reflect $78 million in net reimbursements from Microsoft, including $43 million for net transition cost reimbursements that took place in 2009 and $35 million for search operating cost reimbursements.

Yahoo has been rumored to be in talks with location based social network Foursquare to buy up the startup for $100 million plus, but its still unclear if Foursquare will take an acquisition or will stay independent and raise funding. And Yahoo recently lost CTO and EVP Products Ari Balogh.

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