Washington Post (WPO) Internet Growth Too Slow

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The Washington Post Company (WPO) put out its quarterly numbers today. Wall St. loved the figures and pusked the stock up over 6% to to $841.

Net income fell to $69 million from $79 million in the quarter a year ago. Revenue for the second quarter of 2007 was $1,046.8 million, up 8% from $969.0 million in the second quarter of 2006

The driver at the topline was the Kaplan education businesses which improved revenue by 23% to $503 million. Revenue at the company’s newspapers fell 7% to $228 million. Magazine revenue dropped 13% to $73 million. Cable revenue rose 9% to $154 million.

In an article run in Fortune last week, the magazine made the point that The Washington Post is banking on the internet to "save serious journalism." The company’s CEO, Donald Graham, made his point: "If Internet advertising revenues don’t continue to grow fast," he says, "I think the future of the newspaper business will be very challenging. The Web site simply has to come through."

The new earnings report gives WPO a low grade in that arena. According to the company’s earnings release: Revenue generated by the Company’s online publishing activities, primarily washingtonpost.com, increased 11% to $28.2 million for the second quarter of 2007, from $25.3 million for the second quarter of 2006.

Not only is that a very small number relative to the size of the newspaper operation, but the revenue growth rate is very low. The growth rate at The New York Times Company (NYT) was over 20% in the last quarter.

WPO shares may be up, but someone forgot to read the fine print.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.