By David Schepp BBC News Online North America business reporter

In reporting its first profit in a year and half, internet veteran Yahoo! has left the dark days of the dot.com bubble burst behind it - or so it seems.

We try not to think too much about what the Street thinks...

Susan Decker Yahoo CFO

Yahoo stunned analysts on Wednesday by posting a larger than expected profit - 3 cents a share versus 2 cents - but in doing so increased scrutiny on how the internet portal managed to pull it off.

The most widely used of web sites, Yahoo said it boosted its bottom line by keeping a tight focus on its business plan, which includes services such as personal ads, for which users pay a fee.

But instead of rewarding the stock, Wall Street sent shares lower in early Thursday trade as investors despaired over whether Yahoo could remain profitable in the coming months.

A late rally on Wall Street came to Yahoo's rescue, and by the close of trade its shares were up 73 cents at $12.92.

Justifying value

Despite the late rally, a number of tech-stock watchers, after eyeing Yahoo's latest quarterly trading statement, turned glum.

Among them was Merrill Lynch, which issued a rare 'reduce/sell' rating on the stock, reducing it from 'neutral'.

The investment banker expressed concern that Yahoo could not sustain the growth that propelled it to profitability during the April-June period.

CEO Semel: Focused on Yahoo's new businesses

Goldman Sachs, too, warned investors Yahoo's stock price remains a little to rich given the company's inability to maintain momentum with its new business plan.

Soundview Technology analyst Jordan Rohan said, "It's a good quarter, but the question is whether the company posted enough upside to justify the value."

Looking deeper

Yahoo still derives 60% of its revenue from its traditional marketing services, which include its joint ventures with other web sites and businesses as well as profits derived from ads run on its many sites.

But earlier in the year, the firm announced a bold new plan to diversify its businesses and make the firm less susceptible to downturns in advertising, much like the one that exists now.

What puzzles Yahoo chief executive Terry Semel is why analysts are browbeating the company's stock when his firm has followed through exactly with the schemes it intended.

As part of its "diversification" plan, Yahoo has weaned itself from its reliance on the cash it derives from high-profile advertisers on its many sites and added ads to its search site.

In addition, it has made several acquisitions of profitable firms, such as career web site HotJobs and internet search site Overture, that pushed up profits.

It's one of those little gleaming lights in the valley of darkness

Paul Kim, analyst

The firm has also boosted its income by charging modest fees for some of its services, which have attracted more than 1 million customers, most of whom peruse personal ads or opt for enhanced e-mail features.

Delivering on promises

Despite the broadening, Merrill Lynch expressed concern that much of Yahoo's growth came from its new initiatives.

That leaves Yahoo officials scratching their heads.

"We delivered numbers that significantly exceeded what analysts were carrying," Yahoo chief financial officer Susan Decker told BBC's World Business Report, adding that the firm tries "not to think too much about what [Wall Street] thinks and the things we can't control".

But not every analyst sees doom and gloom ahead for Yahoo.

"It's one of those little gleaming lights in the valley of darkness," said Paul Kim, analyst at Kaufman Brothers.

"They gave people what they expected and perhaps a bit more."

Yahoo officials, however, may have the last laugh.

Shares of the firm ended Thursday's topsy-turvy day of trading up, gaining 7% to about $13.