Revenue for the first quarter of 2007 was $156.9 million--an increase of $39.6 million, or 34% from first-quarter 2006. Adjusted EBITDA for the first quarter was $41 million--up 50% from the same period in 2006, the company reported.

"The first quarter was a great start ... with all segments performing above plan," said James Zarley, chairman and CEO of ValueClick. "We continue to differentiate ourselves through a unique combination of technology, process, relationships, and our constant focus on industry best practices."

The $3.1 billion Google/DoubleClick and $680 million Yahoo/Right Media deals, along with a rumored $1 billion Microsoft bid for 24/7 Real Media, has put the online advertising sector into play.

In that context, analyst Jordan Rohan of RBC Capital Markets last week issued a 19-page research note maintaining that ValueClick's current growth is unsustainable because it employs questionable lead generation tactics such as using the word "free" when multiple purchases are required, or using lengthy surveys to generate email addresses for resale to marketers without sufficient disclosure.

ValueClick's business is misunderstood, Rohan wrote, and said the majority of upside over the past year has been from lead generation growth.

"In our view, the writing is on the wall for reform of the highly-incentivized lead generation companies like ValueClick's WebClients. The timing of that reform is hard to predict with accuracy, but the ultimate magnitude could be significant," Rohan wrote.

The report cites three examples of lead generation sites it believes use "overly-aggressive marketing practices" it perceives as questionable under existing Interactive Advertising Bureau and Direct Marketing Association guidelines. They are www.freelawntractor.com, www.eatfreeandbemerry.com, and www.pinkphone4free.com.

Stanford Group this week issued its own bulletin, stating "we believe the FTC is investigating deceptive Internet advertising by several companies, particularly relating to offers claiming or implying "free" products. While it is unclear whether ValueClick is one of those companies, the practices being investigated could negatively impact ValueClick's lead generation business."

"We believe our disclosure and privacy policies comply with all state and federal guidelines," Zarley said.

As for ValueClick's position in the market, he said: "To me, the recent M&A events validate what our strategy has been all along ... Our objective has always been to take the risk out of the buying decision [for advertisers]. We do all of this without conflict."

"We're not aware of any imminent legislation," he said when asked about the health of the lead-generation business, "but we do have people who are tracking any potential developments ... We will monitor it and to some degree it may not all be bad, because it could call out some of the bad actors in the space ... We have not been involved in that, and we're not involved."

Shares of ValueClick fell 88 cents, or 3%, to $28.43 in extended trading after gaining 42 cents to $29.31 in the regular session.