Report: Digg still mining for profits

This post initially misstated Digg's 2007 loss as reported by 'BusinessWeek.' The company reported lost $2.8 million in 2007.

There are some stunning numbers in BusinessWeek about social news site Digg: In 2007, the company reportedly pulled in only $4.8 million in revenue and lost $2.8 million. In the first three quarters of 2008, it lost $4 million on $6.4 million in revenue.

Digg declined to comment on the numbers.

This is a little bit disconcerting, if true. Digg has been one of the hottest start-ups in Silicon Valley's hype machine for the past few years, due ironically in part to an August 2006 BusinessWeek cover story depicting boyish founder Kevin Rose giving a grin and a thumbs-up. (What innocent days those were!) It's also been vocally committed to growth, and has said that it's still hiring in the midst of the current recession.

When Digg raised its last round of funding--a $28.7 million Series C in September--rumors pegged its valuation at around $164 million. That's significantly lower than the $200 to $300 million that was occasionally talked about in those pesky acquisition reports.

Which, by the way, we haven't heard many of recently. It used to be, per the gossip mill, that either Google or News Corp. or Microsoft or somebody else was trying to nab it; Al Gore's Current Media reportedly offered $100 million in 2006 and was snubbed.

Digg has a wild cult following, and Rose's background as a TV anchor and popular "Diggnation" podcast have turned him into one of the Web's biggest celebrities. And its traffic, by all accounts, continues to grow steadily as Digg makes strides to expand its base beyond the geeky young newshounds who made its community famous.

CEO Jay Adelson says he's cracking down and now aims to make the company profitable in one year rather than two. Considering what BusinessWeek has dug up this time (pun completely intended), that could be a tough task.