Fast-growing internet advertising companies ValueClick and aQuantive nearly agreed to merge in recent days, but the deal fell apart at the last minute, according to the Wall Street Journal. The talks between the two mid-level players point to the growth of online advertising - and to the challenge that midsize firms face in getting to the next level, to compete with larger players such as Google and Microsoft. ValueClick's and aQuantive's capitalization is in the neighborhood of $1.7-$1.8 billion

ValueClick yesterday reported 1Q06 revenues of $117.3 million, an increase of $65.9 million, or 128 percent, from revenue of $51.4 million in the year-ago quarter. Those results include a full quarter of operations from E-Babylon and Webclients, both acquired in June 2005, and Fastclick, acquired in September 2005. Net income in Q1 was $9.8 million, or $0.09 per diluted common share, compared with $8.7 million, or $0.10 per diluted common share, in 1Q05. ValueClick is increasing its 2006 revenue guidance to $495-$505 million from $490-$500 million, and its adjusted EBITDA from $125-$130 million to $128-$131 million.

Meanwhile, aQuantive also beat Q1 expectations, with revenues growing more than 40 percent compared with the year-earlier quarter, reaching $92.2 million from $65 million in 1Q05,reports the Puget Sound Business Journal. First-quarter net income rose to $7.6 million, or 10 cents per diluted share, up from $6.4 million, or 9 cents per share, a year earlier. Fiscal year 2006 revenue should be between $390 million and $405 million, with net income of between 44 cents and 48 cents per share, the company said.