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Profits and sales at Yahoo in the last three months of 2006 have beaten analysts' expectations.

The internet search and media firm has been under growing pressure as analysts worry about technical difficulties and the challenge posed by rival Google.

Net revenue - income minus advertising commission - was $1.23bn (£621m), a 15% year-on-year rise.

However its profits of $268.7m were 61% lower than a year ago because of a one-off gain in 2005.

Stock option expenses, which did not feature on the 2005 balance sheet, also dragged the figure lower comparatively.

The final quarter of the year is usually the peak season for web firms such as Yahoo that depend on advertising for their income.

Next month Yahoo launches a new web search advertising system, which the firm's chief executive Terry Semel said would help it compete with Google.