By BRIAN BERGSTEIN, AP Business Writer

SAN JOSE, Calif. (AP) - Shares of Yahoo! Inc. moved moderately higher Thursday, a day after the Internet company reported its first quarterly profit since 2000 and raised targets for the rest of the year.

In releasing the earnings report after the stock market close Wednesday, Yahoo executives said their turnaround strategy — reducing the company's reliance on advertising and focusing on new fee-based services — is paying off.

"There's still a lot to do, but I believe we have a strong platform for growth in some of our largest lines of business," said chief executive Terry Semel.

In the three months ended June 30, Yahoo earned $21.4 million, or 3 cents a share — a marked improvement from the same period last year, when Yahoo lost $48.5 million, or 9 cents a share.

The results ended Yahoo's streak of six consecutive money-losing quarters, and Semel predicted "profitable growth through the remainder of the year."

Revenue was $225.8 million in the second quarter, up 24 percent from $182.2 million a year ago — even though advertising-related revenue slipped 4 percent.

Analysts surveyed by Thomson Financial/First Call had been expecting a profit of 2 cents per share on overall revenue of $215.1 million.

Yahoo climbed 73 cents, or 6 percent, to close Thursday at $12.92 on the Nasdaq Stock Market.

At the height of Internet mania, advertising made up 90 percent of Yahoo's revenue, a model that became devastating in the dot-com bust.

That percentage is now down to 60 percent. Yahoo's fee-based revenue more than doubled, largely from its acquisition last winter of HotJobs, a career-placement site.

Yahoo's chief financial officer, Susan Decker, said revenue in the current quarter is expected to be between $225 million and $250 million, essentially in line with Wall Street estimates of $233 million. For the full year, Yahoo expects between $900 million and $940 million in revenue, ahead of analysts' projections of $900 million.

Decker also raised estimates for Yahoo's earnings before interest, taxes, depreciation, amortization and stock-option costs, though she did not offer earnings per share guidance.

"I think it's nice to get some good news in this market," said Gordon Hodge, a Thomas Weisel Partners analyst who has a "buy" rating on Yahoo stock because he believes the company's growth prospects justify its relatively high price. "They did a great job."

Jim Preissler, an analyst at Investec, was not so impressed, saying Yahoo appears to have improved its financials largely through outside partnerships, such as the HotJobs deal, a paid-search agreement with Overture Inc. and a World Cup-related site.

"If that's where a lot of the growth is coming from, then what happened to the growth from the core Yahoo platform?" said Preissler, who initiated coverage of Yahoo stock Wednesday with a rare "sell" rating. He said he saw "still relatively small signs of life."

Sunnyvale-based Yahoo said its global Web sites have 238 million registered users, up from 200 million a year ago. However, excluding Yahoo! Japan, which is only minority-owned by the U.S. company, the unique user base is 196 million, up from 172 million a year ago.

About 83 million are considered active users, up from 61 million a year ago but flat from the previous quarter.

Yahoo claims to have more than 1 million fee-paying users, and Semel said he envisions passing 2 million by the end of the year. Enhanced e-mail and personal ads are the most popular services Yahoo users are willing to pay for, Decker said.

For the first half of 2002, Yahoo showed a net loss of $32.3 million, or 5 cents a share, on revenue of $418.5 million. In the comparable period last year, the company lost $60.0 million, 11 cents a share, on sales of $362.4 million.