Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Monday, August 21, 2006

Google And Yahoo!: 2+2=3

Stocks: (GOOG)(YHOO)

Google's share of the search business in the US dropped from 44.7% in June to 43.7% in July. Yahoo!'s rose from 28.5% to 28.8%.

Both stocks are down. Google is off 1.5% to $377.65. That is in the middle of its 52-week range of $273.35 and $475.11. The company loses some share and the stock dips.

Yahoo! is a different animal. With its new search technology launching soon, investors would think that Wall St's reaction to an increase in share would be positive. Nope. Yahoo!'s shares are down almost 3% to $28.96, near its 12-month low of $24.91 and well of the high of $43.66.

Yahoo!'s investors have been shell shocked for a long time. In early July, the company's shares were down almost 50% from January. Over $30 billion in market cap disappeared in six months. While Yahoo! has not been the growth engine is was when revenue rose 223% from 2003 to 2005 when the top line hit $5.3 billion, the company is still doing extremely well. Revenue for Q2 06 was $1.576 billion and operating income was $230 billion.

If Google's share of the search market is reaching its zenith, that news can only be good for Yahoo!. It means that the older search engine's share is less likely to attrite and that its new and improved search technology may actually gain back someof the share that Yahoo! has lost.

Yahoo!'s stock may have seen its low.

Douglas A. McIntyre can be reached at He does not own securities in companies that the writes about.

Powered by Blogger