Yahoo! Profit Doubles

Updated from 5:15 p.m. EDT

The market turned to Yahoo! (YHOO) for a bit of cheer this dour earnings season -- and Yahoo! delivered.

For its first quarter ended last month, the Sunnyvale, Calif., Internet giant beat Wall Street's expectations Tuesday and gave hope that there may yet be strong growth in the Internet sector after all. Revenue grew 55% from the year-ago quarter, not bad for a 10-year-old company, which in Internet time qualifies as middle age.

Yahoo! posted earnings of $205 million, or 14 cents a share, up from the year-ago $101 million, or 7 cents a diluted share, a year earlier. Excluding a penny-a-share gain on the sale of investments, latest-quarter earnings were 13 cents a share. Revenue rose 49% from a year ago to $821 million on a so-called net basis, excluding the money Yahoo! shares with its paid search partners.

Wall Street analysts had forecast earnings of 11 cents a share on revenue of $797 million.

Just as impressive were the reasons behind Yahoo!'s growth that CEO Terry Semel gave in a conference call -- not only are more users visiting Yahoo! in the U.S. and around the world, they also are spending more time on the site each time they do. Some 372 million people visited Yahoo! in March calling up more than 100 billion pages from the site, pushing average daily page views up 34% on year.

And the deeper Yahoo!'s users get drawn in, the more attractive the site becomes to advertisers. "Some of the largest advertisers spend between 2% and 4% of their marketing budgets on the Internet," said Semel. "But consumers are spending 15% of their media time online."

As the gap between those two figures narrows, Yahoo! expects to capitalize on its clear lead as the premier advertising venue on the Internet. Already offering big advertisers both branding advertisements such as banner ads and sponsored ads on search results, the company is working on fusing those two ad models closer together.