Yahoo (Nasdaq: YHOO), the No. 3 search engine, reported third-quarter net income that blasted past estimates in part because of extraordinary gains from selling its investment in China’s Alibaba Group.

The Sunnyvale, Calif., company reported net income jumped to $3.16 million, or $2.64 a share, compared with prior-year net income of $293.2 million, or 23 cents a share, as revenue was essentially flat at $1.05 billion, slightly ahead of estimates. After discounting for the Alibaba sale, though, income from continuing operations fell 14 percent to $152 million.

Yahoo last month received pre-tax proceeds from Alibaba of $7.6 billion, including $6.3 billion in cash, $800 million in preferred shares and $550 million  for licenses. It plans to refund $3.65 billion in after-tax proceeds to shareholders.

“We’re taking important steps to position Yahoo for long-term success,” said new CEO Marissa Mayer, who’s expected to brief investors later on Monday. The company didn’t announce other steps or acquisitions.

Shares of Yahoo rose 3 percent to $16.23, up 46 cents, in after-hours trading.

To contact the editor, e-mail: