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NEW YORK (CNNMoney) -- Yahoo reported first-quarter sales and earnings in line with Wall Street's expectations, though net income slid 6% compared to last year.
Display ad revenue was a bright spot in the report, but search figures continued to drop significantly.
Net earnings came in at 17 cents per share, excluding one-time costs. Analysts polled by Thomson Reuters were expecting 16 cents a share.
Excluding traffic acquisition costs -- revenue shared with partners -- Yahoo (YHOO, Fortune 500) had sales of $1.06 billion, exactly in line with estimates. That was a 6% decline from the first quarter of 2010.
Yahoo attributed that drop in part to the sizeable chunk of its sales that it hands over to Microsoft (MSFT, Fortune 500), whose Bing technology underpins Yahoo's search site.
Yahoo expects its second-quarter 2011 revenue to come in between $1.08 billion and $1.13 billion.
Shares rose 2.9% in after-hours trading following the report.
Advertising and search: Yahoo has lost market share in display advertising -- once its biggest stronghold -- to rivals Google (GOOG, Fortune 500) and Facebook.
But Tuesday's report showed Yahoo's display ad business jumped 10% over the year to $471 million. On last quarter's conference call with analysts, Yahoo CEO Carol Bartz said people "hear a lot of hype about Facebook because they have a lot of little impressions, but we focus on display revenue."
First-quarter search revenue, however, plummeted 19% year-over-year to $357 million.
On Tuesday's conference call, Bartz dismissed the decline and called it a "funky comparison" due to the Microsoft search alliance deal.
"We told you there would be major revenue comparison headwinds in 2011," she said. "But those comparisons will get clearer."
Concerns over increasingly anemic search numbers have punished Yahoo's stock. Shares are down more than 12% over the past 12 months, though they started picking up in September -- the stock is off only 3.1% year-to-date.
Last month, Yahoo shares jumped on rumors that the company was in late-stage talks to transfer its 35% stake in Yahoo Japan to Softbank Corp.
Bartz has received praise for aggressive cost-cutting and for landing the Bing search deal, but the overall company turnaround has been slow. Several senior managers have fled Yahoo over the past year.
She took the helm from Yahoo co-founder Jerry Yang, who was the company's CEO until 2008. Yang stepped down amid shareholder anger after Yahoo snubbed a $47.5 billion buyout deal from Microsoft. 
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