(New York Times second quarter earnings article updated with new information on third quarter outlook.)NEW YORK ( TheStreet) -- The New York Times ( NYT) saw earnings fall during the second quarter due to the impact of taxes, but saw revenues increase. For the quarter ended June 27, the company saw earnings drop 18% to $32 million, or 21 cents per diluted share, compared with earnings of $39.1 million, or 27 cents per share, in the same period a year ago. Revenue increased 1.2% to $589.6 million from $582.7 million during the quarter. Circulation revenue was up 3.2% to $234.8 million from $227.5 million due to higher subscription and newsstand prices at The New York Times and The Boston Globe. Advertising revenue reported a marginal decline to $314.9 million from $315.5 million. Print advertising revenues decreased by 6.1%, while digital advertising was up 21.2% to $82.4 million from $68.0 million. "Online advertising revenues have become a larger part of our mix and made up 26 percent of the company's total advertising revenues in the 2010 second quarter, up from 22 percent in the same prior-year period," said Janet Robinson, president and CEO of The New York Times Company. Internet revenue from the company's websites, including NYTimes.com, About.com and Boston.com, was up 20.5% to $94.3 million from $78.2. The company is hoping to expand its audience by making its product available beyond the traditional print model, including via the Internet, mobile devices, e-readers and through social media platforms. "In June alone we had approximately 106 million page views from our mobile sites and apps. We have also reached roughly 4.5 million downloads of our iPhone news app since its launch two years ago," Janet Robinson said. For the first half of the year, the company swung to a profit of $44.8 million, or 29 cents a share, compared with a loss of $35.4 million, or 25 cents a share, in the same period a year ago. Revenue were essentially flat, dropping 1% to $1.18 billion from $1.19 billion. The total advertising revenue declined 3.2% with the biggest drop in classified real-estate advertising revenue, which fell 19.6%. In the third quarter management expects to see print advertising revenue to improve while digital advertising is expected to see mid-teen revenue growth. The company is also building a pay model for NYTimes.com that will be introduced in 2011 which may attribute to higher expenses in the third quarter. It is hoping to gain revenue by expanding its local initiatives in cities around the country, including San Francisco and Chicago. New York Times shares are up more than 2% in afternoon trading to around $9.30. -- Reported by Theresa McCabe in Boston. Follow Theresa McCabe on Twitter and become a fan on Facebook.