• by Masha Geller , July 25, 2002

Last February, at the AAAA Media Conference in Orlando, Solomon Smith Barney analyst Lanny Baker predicted that Overture – the paid online search provider he likened to online yellow pages – would probably outpace Yahoo! in revenues in the next year.

Looks like Baker was right on target. Overture yesterday reported a sharp increase in second-quarter sales and earnings, and said its business was thriving.

Overture has officially emerged as one of the few successful Internet advertising businesses. The company reported net income of $17.5 million, compared with a loss of $2.9 million a year earlier, and said its revenues rose to $152.5 million from $62.5 million.

Interestingly, the company said that the number of "paid introductions," declined to 515 million in the second quarter, from 587 million in the first quarter. And that could have a lot to do with competition from Google.

These earnings results come less than a week after Overture lost a rather large account to Google, which has inked a three-year deal to provide listings to search engine Ask Jeeves starting in September. The deal is expected to generate $100 million in sales over the next three years, with Ask Jeeves receiving the lion's share of that revenue. The Ask Jeeves upset came about two months after Google cemented a deal to supplant Overture as the paid listings provider for AOL.

Nonetheless, Overture CEO Ted Meisel said it appeared the industry was at a point where all players stood to benefit from increased competition, and the higher awareness this would bring to paid search.