Yahoo EarningsUPDATE, 3:10 PM: Scott Thompson gave analysts fair warning that they’re in for a roller-coaster ride while he deals with the rot he found at Yahoo after he landed the top job in January. Following his recent 2,000 layoffs, Thompson says he plans to pull the plug on some unnamed technologies, consolidate several business lines, and focus R&D on Yahoo-owned businesses as opposed to initiatives like the one to create platforms for outside publishers. The company “has been doing way too much for too long and has only been doing a few things really well.” Thompson added that Yahoo needs to be “clearer going forward about what we won’t do”, noting that the company “had way too many people for the output” from its businesses. He offered few specifics about what he wants to do, but said while Yahoo doesn’t have to re-invent itself he intends to “re-invent the experiences our users have” with its most popular websites and services. Notably, Yahoo has to “get good real fast” in mobile services and devices. “Over time we will earn the right to pursue new growth opportunities.”

Scott Thompson YahooThompson acknowledged that Q1 results beat forecasts due to lower-than-expected costs. “I’m not satisfied with the pace of top-line growth,” he says. The display ad business, which declined in the quarter, is “nowhere close to where it needs to be.” Yahoo says that all of the recent changes at the company make financial results for the current quarter hard to project — especially since there may be a write-down related to its layoffs and reassessment of some of its businesses. CFO Timothy Morse says that the company expects $135M in severance costs from the layoffs and “we’ll undoubtedly add to that.” Thompson says he’s working on a deal to “simplify” Yahoo’s relationship with Chinese Internet giant Alibaba — which may include selling some of his company’s 43% stake. He says that there probably won’t be a similar deal involving Yahoo Japan; he and his partner Softbank are too far apart in their view about its value.

PREVIOUS, 1:35 PM: Granted, expectations were low for Yahoo — it’s had a tough year and its new CEO Scott Thompson just slashed 2,000 jobs. But the Internet giant soundly beat Wall Street estimates in its Q1 financial report today. Yahoo generated net earnings of $286.3M, up 28% vs the same period in 2011, on revenues of $1.08B, up 1%. The revenue figure topped the $1.06B that analysts forecast. But earnings per share of 23 cents were well above projections of 17 cents. Investors seemed to like what they saw: Yahoo was up more than 2.5% in initial after-hours trading following the earnings release — even though revenues from display ads were down 4% year-over-year. Thompson says that the company has “made changes to resize the organization and establish a new leadership structure to quickly deliver the best user and advertiser experiences at scale.” We’ll see how things go when he faces analysts in the company’s quarterly earnings conference call. This morning Third Point’s Dan Loeb, one of Yahoo’s biggest investors, posted 18 questions he has for Thompson. Loeb is on a slate of board candidates challenging Yahoo’s candidates. Stay tuned.