NEW YORK (CNN/Money) - Internet media company Yahoo! reported an earnings increase of 137 percent for its second quarter, in line with expectations, on slightly better-than-anticipated sales.

The company earned $50.8 million, or 8 cents a share, compared with net income of $21.4 million, or 3 cents a share, a year ago. Sales came in at $321.4 million, up 42 percent from revenue of $225.8 million, in the same period last year. According to First Call, analysts were expecting the company to report sales of $315 million.

But shares of Yahoo! (YHOO: Research, Estimates) fell nearly 6.5 percent in after-hours trading following the release of the report, after gaining 19 cents, or 0.5 percent to $35.29 in regular trading Wednesday. The stock has surged 116 percent so far this year.

It appears that Yahoo! is a victim of its own success. The second-quarter numbers were clearly good, but Wall Street wanted more. In the company's first quarter, Yahoo! reported earnings of 8 cents per share, two cents higher than the First Call consensus estimate.

Yahoo!'s fee-based businesses, which include premium e-mail services, personal ads, games and an Internet access partnership with SBC Communications, rose 43 percent from the same period last year to $69.9 million.

But the performance of this segment was slightly disappointing. Derek Brown, an analyst with Pacific Growth Equities, was forecasting fee revenue of $71 million for the quarter, for example.

Yahoo! remains a company that is highly dependent on advertising, although the ad market continued to show signs of strength. Marketing services sales (i.e. advertising) increased 44 percent from a year ago, in large part due to strength in sponsored searches, which allow advertisers to pay for preferential placement of their ads tied to certain keyword searches.

Overall, ad sales accounted for 68 percent of Yahoo!'s total revenue in the quarter.

"Advertisers are now recognizing the necessity of change given that such a large proportion of their consumers are now online," said Yahoo! CEO Terry Semel, during a conference call.

Listing revenue increased 29 percent from a year ago, to $32.2 million. Yahoo! gets most of its listing fees from HotJobs, which the company acquired last year.

Investors also seemed to be disappointed by the company's outlook. Yahoo! raised its sales guidance for the third quarter and full year but the low end of the new ranges are slightly lower than current consensus estimates. Yahoo! said that it anticipates third-quarter sales to come in between $318 million and $338 million. Analysts are expecting sales of $330 million.

In a research note, Blaylock & Partners analyst Mark Zadell said that Yahoo! would need to show Wall Street that it could post strong sequential sales gains in order to justify its lofty valuation of more than 100 times 2003 earnings estimates. But based on Yahoo's new sales range, the company is calling for a revenue increase of, at best, 5.2 percent from the second quarter.

For the full year, Yahoo! forecast sales to be in a range of $1.26 billion-to-$1.31 billion. The Wall Street consensus is for revenue of $1.28 billion.

Yahoo! did not give targets for net income but did raise its operating cash flow target for 2003 to a range of $375 million-to-$400 million. Prior guidance called for a range of $350 million-to-$380 million.

Analysts expect Yahoo! to report earnings of 9 cents per share in the third quarter and 35 cents per share for the full year.

Internet stocks have been among the stronger performers of the year and shares of other leading Internet companies also lost ground in after-hours trading. Ebay (EBAY: Research, Estimates) dipped 1.7 percent, InterActive (IACI: Research, Estimates) fell 2.3 percent and Amazon.com (AMZN: Research, Estimates) dropped 3 percent.