Yahoo Shares Rise 7 Percent on Big Alibaba Growth

CEO Marissa Mayer also touted the company's original video strategy and a massive hiring push for engineers.

Shares of Yahoo were rising 7 percent in after-hours trading on Tuesday when the Internet firm said its adjusted earnings per share came in one penny higher than analysts had expected and that its investment in Alibaba keeps gaining value.

Yahoo's earnings dropped 20 percent to $312 million in the first quarter, or 29 cents per share. Taking into account special items, the company would have earned 38 cents a share, while analysts expected 37 cents. Revenue after ad commissions, the metric most analysts focus on, was down 1 percent to $1.13 billion compared to last year and about $20 million more than was expected.

Yahoo also reported fourth-quarter earnings for Alibaba, the giant Chinese Internet company in which it owns a 24 percent stake. Earnings there soared more than a hundred percent to $1.4 billion on revenue that surged 66 percent to $3.1 billion.

Alibaba is preparing an initial public offering, and its fast growth and big profits could translate into a $200 billion valuation, which would represent a massive profit for Yahoo.

Shares of Yahoo rose 2 percent Tuesday to $34.21 before jumping more than $2.30 after the closing bell.

During a conference call with analysts, CEO Marissa Mayer discussed producing more video content this year than last, some generated by Yahoo and some from partners. She also said Yahoo hired "300 talented engineers" during the last quarter, and that the company boasts more than 430 million monthly mobile users.