SAN FRANCISCO - Yahoo Inc reported an uptick in revenue that marked its first quarterly sales growth in three years, as new Chief Executive Scott Thompson outlined his plan to revamp the struggling Web company.

Citing moves to shut down dozens of underperforming online properties, while making online commerce and mobile products a bigger part of Yahoo's business, Thompson described "the first steps" to regain market share from online rivals and revive the company's growth.

"I'm convinced that we don't need to reinvent who we are," Thompson said during a conference call with analysts on Tuesday. "But I'm equally convinced we absolutely do need to reinvent the experiences our users have with the marquee properties that bring them to Yahoo every day."

Thompson also said that Yahoo was once more exploring ways to "monetize" some of its stake in China's Alibaba Group.

Shares of Yahoo increased 2.7 percent to $15.41 in after hours trading on Tuesday.

The comments marked the most extensive details Thompson has provided about his strategy since taking the top job at Yahoo in January.

But the former PayPal president faces a high wall of skepticism from investors who have watched several failed attempts to restructure and revitalize the one-time Web pioneer in recent years. Carol Bartz, Thompson's immediate predecessor, was fired over the phone in September.

"I didn't hear anything particularly aggressive or transformative in what he said," said Macquarie Research analyst Ben Schachter.

"While Scott has a great track record, the company itself has done many of these things," in the past, Schachter said.

Yahoo said its net income grew 28 percent in the three months ended March 31 to $286 million, or 23 cents a share, outpacing Wall Street expectations of 17 cents a share.

Much of the increase in quarterly profit came from Yahoo's earnings in equity interests, which more than doubled year-on-year and comprise mainly its investments in Alibaba as well as Yahoo Japan.

"Their minority stake in their investments is generating more profit than their core business," said BGC Partners analyst Colin Gillis.

ASIAN TALKS

Yahoo's plans for its Asian assets are being closely watched by investors, many of whom have argued that Yahoo should sell all or part of its holdings in the companies.

Thompson told analysts that Yahoo was exploring a simpler deal to try and "monetize" its 40 percent slice of China's Alibaba, a stake valued at billions of dollars and that Yahoo once discussed unloading in a complex tax-efficient transaction.

Thompson did not elaborate, but his comments suggest the company -- which broke off deal talks with Alibaba and Softbank last year -- was willing to go back to the negotiating table. He said that returning cash to shareholders, in the event of such a deal, would be at the "top of the list" of priorities.

Thomson also noted that plans to monetize its stake in Yahoo Japan, underway for more than a year, have been beset by a "valuation gap" which the parties have failed to "bridge." As a result, Thompson said, Yahoo was now focused on talks with Alibaba.

Yahoo's partnership with Microsoft Corp is also a work in progress. The 10-year search deal that the two companies entered into in 2009 has not performed up to expectations.

Thompson said he was personally working with Microsoft Corp to improve the payoff from the companies' 10-year search partnership, which has not lived up to expectations.

Even so, Yahoo said that better-than-expected performance for its search ads helped the company increase its quarterly net revenue year-on-year for the first time since the third quarter of 2008.

Yahoo's core display advertising business declined 4 percent during the first quarter.

The company's net revenue, which excludes payments to partners, totaled $1.077 billion in the first quarter, compared to $1.064 billion in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for net revenue of $1.06 billion.

It forecast net revenue in the second quarter of between $1.03 billion and $1.14 billion.

Once one of the Web industry's pioneering companies, Yahoo has seen its growth stunted in recent years amid competition from Google Inc and Facebook.

Thompson, the former president of PayPal who took the reins in January, announced plans this month to lay off 14 percent of Yahoo's staff and reorganize the management structure.

Thompson said on Tuesday that Yahoo is shutting down or "transitioning" roughly 50 properties that do not contribute meaningfully to user engagement or revenue.

As part of the reorganization, Thomson created a new "commerce" group which will initially consist of existing Yahoo online properties such as real estate and auto listings.

But analysts said Thompson was short on details on the commerce group, as well as on plans to bolster Yahoo's efforts in mobile.

Mobile is viewed as a critical area for Web companies, as consumers increasingly access the Internet from wireless devices such as smartphones and tablet PCs. Earlier this month, Facebook announced a $1 billion deal to acquire Instagram, a mobile photo-sharing apps.

"If you have a company out there that's paying a billion dollars for a mobile app and you have Google going after Android and Motorola...what's Yahoo's whole play on this?" said Susquehanna Financial Group analyst Herman Leung.

"It's still a wait and see story," Leung said of Yahoo.

(Reporting By Alexei Oreskovic; Editing by M.D. Golan and Sugita Katyal)