Yahoo's revenue drops 4 percent, misses estimates

(Reuters) - Yahoo Inc reported first-quarter revenue below analysts' estimates as the veteran internet company struggles to rev up its core online advertising business.

Yahoo's shares were down 2.1 percent at $43.72 in extended trading after the company also reported a lower-than-expected quarterly profit.

Revenue growth has stalled in recent years as Yahoo's once-hot Web portal and email service have lagged rivals such as Google Inc and Facebook Inc .

Chief Executive Marissa Mayer has revamped many of Yahoo's products and acquired a string of companies in the past two years, but she has been unable to revive the company's revenue growth.

Yahoo said display advertising revenue rose 2.3 percent to $463.7 million in the quarter, accounting for roughly 40 percent of its total revenue. Search business revenue was up 19.5 percent year-on-year to $531.7 million.

The company plans to spin off its 15 percent stake in China's Alibaba Group Holding Ltd , responding to pressure to hand over to shareholders its prized e-commerce investment valued at roughly $40 billion.

Net income attributable to Yahoo fell to $21.2 million, or 2 cents per share, for the quarter ended March 31, from $311.6 million, or 29 cents per share, a year earlier.

On an adjusted basis, earnings were 15 cents per share.

Revenue, excluding fees paid to partner websites, fell to $1.04 billion from $1.087 billion.

Analysts on average had expected a profit of 18 cents per share on revenue of $1.06 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Bill Rigby and Lehar Maan; Editing by Saumyadeb Chakrabarty)