Yahoo! Inc. (YHOO) posted its first major positive earnings surprise in the past 4 quarters when it released first quarter 2010 earnings of 22 cents per share, on revenues of $1.6 billion (not including advertising commission payouts). This more than doubled the Zacks Consensus Estimates of 9 cents per share and $1.2 billion in revenues.

Display advertising grew 20% year over year at Yahoo!, including a 24% jump in guaranteed display. Yahoo! is making strides among social networks and spreading its global reach. The company also took $78 million in search services reimbursement from Microsoft (MSFT) as Yahoo! continues its transition to Microsoft’s search platform.

Analysts and traders both had been very quiet ahead of the big positive surprise. Shares traded in a very tight range for the last hour before the closing bell today, and only one of Yahoo!’s 27 analysts covering the company had made any earnings estimate revisions over the past 30 days — an upward move that sent the fiscal year 2010 consensus soaring by a full penny. In 3 of the previous 4 quarters, the Zacks Consensus Estimate had nailed earnings results exactly.

That said, YHOO shares are down 2% in the after-market, reflecting a pattern early this earnings season of a slight sell-off following an earnings beat. Yahoo! shares have been trading in their highest range year-to-date over the past week, however, so perhaps we are seeing a bit of profit-taking at these levels.

Our extended report will be published before the market opens Wednesday.
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