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High-speed Internet

Revs reach $1.33 bil but only $254 mil income at Yahoo!

Yahoo! Continued its high-speed growth track last quarter as revenues rose nearly 50%, but rising costs kept profits flat.

As big media congloms continue to invest in the Net, the online media giant emphasized its ability to compete effectively for advertising dollars and traffic as users hunt for compelling content.

“There’s an opportunity for Yahoo! To take a leadership position and start to evolve a whole new industry in media and media content,” topper Terry Semel said in a conference call with analysts. “We’re looking at a series of things, some of which will be generated by Yahoo!, some licensed and some from partners. A large part will also be user-generated content that Yahoo! will totally enable.”

Under media topper Lloyd Braun, Netco is greatly expanding its presence in Santa Monica, where all its original content operations are headquartered.

In a development that could cement its position atop the Internet media world, Yahoo! has reportedly held initial talks to acquire part or all of Time Warner’s America Online; Semel declined to comment.

Microsoft has engaged in more substantive talks with the once-again hot Netco, but it’s unclear whether TW will make a deal with anyone.

Media companies diving into the digital world include News Corp., which has spent nearly $1.5 billion buying MySpace and other Netcos, and Viacom, which recently acquired NeoPets and iFilm. Other congloms investing heavily in their own online operations include Disney and NBC Universal.

Yahoo!’s revenues reached $1.33 billion in the quarter ended Sept. 30, up 47% from a year ago. However, net income was $254 million, essentially flat, as costs rose across the board, including marketing and new product development.

Yahoo! shares closed down 1% at $33.70 Tuesday before earnings were announced.

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