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Updated from 4:26 p.m. EST to provide company comments regarding first-quarter guidance in the sixth paragraph.



) --



shares are surging on better-than-expected results, as the company reported a revenue increase of 2% year-over-year, the first time the company's annual revenue has grown in four years.

On a non-GAAP basis, Yahoo! earned 32 cents a share on $1.22 billion in revenue during the fourth quarter. Yahoo! revenues exclude traffic acquisition costs (TAC).

Analysts polled by

Thomson Reuters

were looking for earnings of 28 cents a share on $1.21 billion for the quarter.

"I'm proud of Yahoo!'s 2012 and fourth quarter results. In 2012, Yahoo! exhibited revenue growth for the first time in 4 years, with revenue up 2 percent year-over-year," said Yahoo! CEO Marissa Mayer. "During the quarter we made progress by growing our executive team, signing key partnerships including those with NBC Sports and CBS Television, and launching terrific mobile experiences for Yahoo! Mail and Flickr. At the same time, we achieved tremendous internal transformation in the culture, energy and execution of the Company."

In the fourth quarter, search revenue excluding TAC came in sharply higher, at $427 million, a year-over-year increase of 14%. For the full year, search revenue ex-TAC was $1.61 billion, up 9% year-over-year.

The company provided first-quarter and full-year revenue guidance on the earnings call. For the first quarter, Yahoo! expects to generate between $1.07 billion and $1.1 billion in revenue. For the full year, Yahoo! expects sales between $4.5 billion and $4.6 billion.

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Yahoo! ended the quarter with $6 billion in cash and cash equivalents, aided by the partial sale of its


stake. During the quarter, Yahoo! bought back 80 million shares for $1.5 billion.

Shares of Yahoo! closed the session lower, off 0.29% to wind up at $20.32. The stock is moving higher in extended hours trading, gaining 1.43% to trade at $20.60, according to

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Written by Chris Ciaccia in New York

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