Yahoo! Beats Targets

The news comes as investors struggle to evaluate the prospects of big Internet players like Yahoo!, InterActiveCorp (IACI) and eBay (EBAY) in the ever-lengthening shadow of rival Google (GOOG). While Internet advertising revenue rose 26% in the first six months of the year to $5.8 billion, the big Net stocks -- except for Google -- have found themselves out of favor with investors. Yahoo! shares have fallen 12% and eBay is down 32%. InterActiveCorp has dropped 18% while Amazon.com (AMZN) is down 2%, in line with the broader S&P 500 index. Google has been the exception, gaining 52%.

Meanwhile, big media players ranging from Google and Yahoo! to Comcast (CMCSA) and Microsoft (MSFT) continue to circle around the once-shunned America Online unit of Time Warner (TWX) in a bid to bolster their online heft. Yahoo! chief Terry Semel declined in a postclose conference call Tuesday to discuss the company's decision to join the fray in bidding for AOL.

Yahoo! shares dropped 46 cents in regular trading Tuesday to close at $33.70. In the after-hours session, the stock rose 25 cents to $33.95.

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