Yahoo's first quarter revenue fell short of Wall Street targets, as the Internet company continued to feel the effects of declining traffic to its Web properties and of falling display advertising sales, sending its shares down more than 4 per cent.

Yahoo chief executive Marissa Mayer said the company's plan to reverse the trend and restore the one-time Web powerhouse to its former glory was on track and would start showing results in the second half of the year. But she repeated previous comments that revitalising

Yahoo will be a long-term project measured in years. "We are committed to growing our core business. First in line with the industry and ultimately surpassing it," said Ms Mayer, a former Google executive who in July became Yahoo's third chief executive in a one-year period.

Ms Mayer said the company was making headway luring smartphone users to its services, with more than 300 million monthly mobile users in the first quarter, up from 200 million in the fourth quarter. And she said that hiring efforts and acquisitions have positioned Yahoo to ramp up its product development and product releases in the coming months.

Yahoo's stock has surged more than 50 per cent since Ms Mayer took the helm in July, though analysts say much of the rise is due to stock buybacks and the value of Yahoo's Asian assets.

Evidence of a significant turnaround in Yahoo's business was hard to spot in the company's first-quarter earnings report, however.

Display ad revenue, which accounts for roughly 40 per cent of Yahoo's revenue, declined 11 per cent on an adjusted basis in the first three months of the year. "This is a core business that needs significant work," said Macquarie Research analyst Ben Schachter. "The core takeaway here is more time is going to be needed."

Yahoo shares fell to $22.73 in after-hours trading last night.

Yahoo also projected net revenue for the second quarter of $1.06 billion to $1.09 billion in a presentation posted on its website after its earnings release yesterday.