The company said it made a profit of $28.9m (£18.5m), or five cents per share, in the third quarter of the year, compared with a loss of $24.1m last time.

Our efforts to position the company for sustainable, profitable growth are paying off

Terry Semel, Yahoo chief executive

The profit was higher than most analysts had been expecting.

The company said its revenue increased by 50%.

Much of that came from new services, including the online recruiting site Hot Jobs that Yahoo acquired earlier this year.

But the firm said that even its advertising sector performed well and had attracted small and medium sized businesses.

Boost for shares

Earlier this year, Yahoo entered a partnership with the online advertising company Overture Services to include paid ads, also known as paid listings, in its internet search results.

The company said the new feature had attracted many smaller advertisers who could not afford large promotions.

When the New York stock market closed Yahoo shares were up 47 cents at $9.98 a share.

But once the financial figures had been published they were selling for around $10.15 in after-hours trading.

"Despite a challenging external environment, it is clear Yahoo is benefiting from the strategy and plan we laid down nearly a year ago," said the chairman and chief executive Terry Semel.

"Our efforts to position the company for sustainable, profitable growth are paying off," he added.