Microsoft and Yahoo updated their search partnership in April to allow more flexibility in searches and end Yahoo's exclusive sales force role with advertisers.

San Francisco - Yahoo showed more signs of progress during the fourth quarter as the Internet company took advantage of higher ad prices and rising earnings from its international investments to deliver numbers that exceeded analyst forecasts.

The results announced Monday covered Yahoo's first full quarter under CEO Marissa Mayer. Yahoo Inc. lured Mayer away from Google Inc. in mid-July in its latest attempt to snap out of a funk that had depressed its revenue and stock price.

The company fared well enough in the final three months of last year to produce its first full-year gain in revenue since 2008.

Yahoo is now being run by its fifth permanent or interim CEO since then. Mayer, 37, has been focusing on improving employee morale and building better mobile and social networking services so Yahoo can make more money from two of technology's hottest trends.

Her efforts so far haven't 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 revenue from search and display advertising totaled $1.07 billion, roughly the same as a year earlier.

But Yahoo's average price for display ad on its website rose 7 percent from the previous year. Meanwhile, the average price for Yahoo's search ads increased by 1 percent from the previous year. The upturn indicates advertisers believe Mayer's changes are paying off.

Investors are clearly impressed with what Mayer has been doing. Yahoo's stock gained 92 cents, or 4.5 percent, to $21.23 in extended trading. The shares are now up by 35 percent since Mayer joined the Sunnyvale, California, company.

Yahoo has been benefiting from its significant stakes in Yahoo Japan and China's Alibaba Group, two Internet companies that have been thriving. Yahoo's fourth-quarter income from its investments increased 17 percent from the previous year to nearly $149 million.

Overall, Yahoo's fourth-quarter earnings dipped 8 percent from the previous year to $272 million, or 23 cents per share, from $296 million, 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 surveyed by FactSet.

Yahoo's fourth-quarter revenue increased 2 percent from the previous year to $1.35 billion.

After subtracting advertising commissions, Yahoo's fourth-quarter revenue stood at $1.22 billion - about $10 million above analyst forecasts. - Sapa-AP