By Matt Ayres

Yahoo has reported worse-than-expected profits for the first three months of this year, adding to concern from investors.

The company said it earned $21m (£14m) in the first quarter, compared with $312m a year earlier.

While revenue from the company's mobile offerings increased by 61%, overall revenue from operations was below expectations at $1.04bn.

Yahoo shares fell nearly 2% in trading after markets closed.

"Yahoo is amidst a multi-year transformation to return an iconic company to greatness," said chief executive Marissa Mayer.

Investors are now worried about how the company will continue to generate revenue once it spins off its 15% stake in Chinese e-commerce giant Alibaba.

Ms Mayer highlighted a re-negotiated contract with Microsoft as a potential area of new growth, and also said the company's partnership with search engine Mozilla had led to increased search traffic.