Yahoo got a little healthier during the last three months of 2012 as the long-suffering Internet company took advantage of higher ad prices.
It also saw more money coming in from overseas investments to deliver numbers that exceeded analyst forecasts.
The results announced last night covered Yahoo's first full quarter under chief executive Marissa Mayer.
Yahoo lured Mayer away from Google in the middle of July in its latest attempt to snap out of a downward trend that had depressed its revenue and stock price.
Although Yahoo still is not keeping pace with the overall growth of the Internet ad market, the company fared well enough during the fourth quarter to produce its first full-year gain in revenue since 2008. But it was a small revenue increase: just $2.4m higher than 2011's total of nearly $5 billion.
Yahoo is now being run by its fifth permanent or interim CEO since 2008.
Mayer, 37, has raised hopes among investors and employees with her Google pedigree and her pledge to transform Yahoo's website into a destination that attracts web surfers and advertisers.
During her first six months on the job, she has primarily focused on boosting employee morale and building better mobile and social networking services so Yahoo can make more money from two of technology's hottest trends.
"The future of Yahoo will be about innovation, execution and continued progress on a multi-year march toward growth, delighting users and driving shareholder value," Mayer said last night.
Yahoo has been feeding the rally by using part of a $7.6 billion windfall that it received from selling half its stake in Chinese Internet company Alibaba Group. The company spent $1.5 billion buying back nearly 80 million of its shares at an average price of $18.24 in the fourth quarter. Buybacks help boost the stock price for remaining shareholders.
Mayer highlighted some of the company's recent strides during a conference call last night. She said internal surveys show 95% of Yahoo's 11,500 employees optimistic about the company's future.
Mayer also touted the potential of a recent redesign of Yahoo's email, saying the number of daily users has increased by 10% since the changes were unveiled last month.
But Mayer's efforts have not made a huge difference in Yahoo's ad sales - the company's main way of making money. For instance, during the final three months of last year, Yahoo's ad revenue was $1.07 billion, roughly the same as a year earlier. By contrast, fourth-quarter ad revenue at Google surged by 19% from the previous year.
Another rival, Facebook, is expected to post much stronger ad growth tomorrow night when the Internet social networking leader is scheduled to release its fourth-quarter report.
Overall, Yahoo's fourth-quarter earnings dipped 8% to $272m or 23 cents per share, down from $296m, or 24 cents per share. The earnings would have been higher than the previous year, if not for a charge to close its South Korea operations and other one-time accounting items.
If not for those charges, Yahoo said it would have earned 32 cents per share. On that basis, Yahoo topped the average estimate of 27 cents per share among analysts.
Yahoo's fourth-quarter revenue increased 2% from the previous year to $1.35 billion. After subtracting advertising commissions, Yahoo's fourth-quarter revenue stood at $1.22 billion - about $10m above analyst forecasts.
Yahoo is not expecting a big improvement this year. The company predicted its revenue, minus commissions, will range from $1.07 billion to $1.1 billion in the current quarter. That is slightly below analysts' average estimate of $1.12 billion.
In an encouraging sign, Yahoo's average price for display advertising on its website during the fourth quarter rose 7% from the previous year and the average price for Yahoo's search ads increased by 1% from the previous year. This marked the first time that Yahoo has detailed the changes in its ad rates from the previous year.
The fourth-quarter improvement could be an indication that advertisers believe Mayer's changes are starting to pay off.
