Yahoo! Makes Lots of Money in Q1

I'm bogged down — I mean delightfully engaged — here at our conference and so have been unable to comment on the range of stories of interest that have come out over the past couple of days. But Yahoo!'s earnings were striking. I'll write more about this and other developments in the next 24 hours.

However, one thing that's very curious and even paradoxical about the big Internet brands and the run-up to their earnings reports is the following dynamic:

• The market has outrageously high expectations, partly based on recent performance.
• There's anxiety that these companies won't hit — really exceed — their targets.
• And then there's surprise (among many) when they do.

Yahoo! CEO Terry Semel offered a bland statement in prepared remarks: "We are on the cusp of witnessing a significant increase in engagement of consumers on the Internet and believe we are best positioned to capitalize on the many opportunities to which we are exposed."

Yahoo!'s now relatively well-diversified revenue streams, its position in the SME/local marketplace, its ownership of Yahoo! Search Marketing (the company formerly known as Overture) and its recent moves into the film/television arena generally validate Semel's remarks.