Yahoo! posted a doubling of its quarterly profit yesterday on strong advertising. Shares in the internet firm were up just over 1% at $39.22 in after-hours trading in New York following an initial enthusiastic reaction to the earnings report.

The California-based firm reported a net profit for the third quarter of $65.3m (£40.8m), compared with $28.9m a year ago. Revenue was $356.8m, compared to $248.8m in the same period last year.

Revenue in marketing services, the company's division responsible for advertising and sponsored search services, rose 48% year-on-year to $245.1m. Yahoo!'s revenue in the unit is watched by analysts as a bellwether of strength in the internet advertising sector.

The company posted 38% growth in its fees revenue, due mostly to its internet access partnership with SBC Communications, and other premium services such as games on demand. It also saw 26% growth in listings revenue, mostly from its HotJobs employment search service.

The company said it ended the quarter with 4.2 million paying subscribers, compared with 3.5 million the previous quarter and 1.5 million a year ago.

For the fiscal year, Yahoo! raised its guidance for profit before depreciation and amortisation to $428m-$448m against previous estimates of $375m-$400m.