Internet media company Yahoo has broken a year-and-a-half long losing streak by posting a net profit on sharply higher revenues, saying it had put the dotcom bust behind it and was rapidly signing up new advertisers and paying customers.

Yahoo, which had previously suffered six consecutive quarters of net losses, this week reported a net profit of $21.4 million (€21.6 million) or three US cents per share in the second quarter, compared with a loss of $48.5 million or nine cents per share in the year-earlier period.

Analysts had been expecting Yahoo to post a profit of two cents per share, according to research firm Thomson First Call.

The company also raised its financial guidance for the remainder of the year.

Revenues rose 24 per cent to $225.8 million from $182.2 million a year earlier, reflecting a number of initiatives taken to offset the loss in dotcom company advertisers that had fuelled its first round of growth.

Those initiatives included the acquisition of the career site HotJobs, the addition of paid advertisements in its search results, as well as premium, pay-for-use services like personals and advanced e-mail.

Revenues from fees on services such as Yahoo personals, as well as paid listings in search results, totalled $74.1 million in the quarter, more than double the level of a year earlier.

"Clearly this is a dramatic improvement and clear proof that we are executing well," chief executive Mr Terry Semel told analysts during a conference call. "We achieved double-digit top-line growth in what I think we would all agree is a tough economic environment."

Mr Semel said Yahoo ended the quarter with one million paying customers, up from 600,000 at the end of the first quarter, and said he thought it could surpass two million by year-end.

Yahoo shares rallied on the strong results. After closing the regular trading session on Wednesday down 51 US cents a share at $12.19, the shares were quoted around $12.75 in aftermarket activity following the earnings release.

The stock has lost about 31 per cent since the start of the year.

"They gave people what they expected and perhaps a bit more," said Mr Paul Kim, an analyst with Kaufman Bros. "It's one of those little gleaming lights in the valley of darkness. The general tone of the business was directionally upward."

Still others cautioned that Yahoo shares remained richly valued, even for a company that was recovering.

"Things are on the mend, but on the mend relatively," said Mr James Preissler, director of digital media at the New York investment bank Investec.

Mr Preissler said Yahoo was achieving double-digit growth mainly because it was rebounding after hitting bottom, but said the company would have to double next year's revenue projections in order to justify its current stock price.

Yahoo provided more guidance for the rest of the year, saying it expected to report third-quarter revenues of $225 million to $250 million, in line with current forecasts.

The company said that it expected to report full-year revenues of between $900 million and $940 million, higher than the prevailing average analyst estimate of $900.3 million as calculated by First Call.

For all their optimism, company executives also seemed to signal that Yahoo remained a company in transition - one that was still in the process of zeroing in on its most lucrative businesses.

After adding fees to more than 20 services, the company said it found that the bulk of fees were coming from just two services - personals and enhanced e-mail features.

In addition, Mr Semel said that the company would continue to "streamline aspects of the company that no longer resonate".

Yahoo officials declined to speculate if any further streamlining would involve layoffs.