Over the past week, quarterly financial results have been released - and the picture they painted for the search engine giants Google and Yahoo! couldn’t have been more different.

Yahoo! Disappoints

• Yahoo! met analyst expectations but disappoints those who wanted to see the company’s growth accelerate.
• Quarterly profit dropped 78%, from US$755 million in Q2 2005 to US$163 million this quarter (this calculation excludes an extraordinary profit from Yahoo! selling Google shares one year ago).
• Revenue increased by 26% to US$1.58 billion.
• Earnings per share are US$0.11.
• Yahoo! shares fell over 18% after the results were released. Overall, Yahoo! shares have fallen around 30% this year.

Google Shines

• Google’ results beat analyst expectations.
• 110% rise in quarterly profit, from US$343 million to US$721 million.
• Revenue increased by 77% to US$2.46 billion.
• Earnings per share are US$2.33, compared to US$1.19 a year ago.
• Google CEO Eric Schmidt reiterates the importance of Google’s international expansion.
• Google regards Google Checkout as their most exciting product launch so far this year.
• Suggestions that the online advertising market has peaked were rejected.
• Google shares rose US$2.78 to $389.90 in after-hours trading.

What about MSN?

Microsoft’s MSN business unit reported a fourth quarter loss of US$190 million, compared to a profit of US$101 a year earlier. Revenue for the quarter was at US$580 million, compared to US$598 million the year before. The loss was caused by MSN heavily investing in search, trying to catch up to market leader Google.

Overall, Microsoft reported a 24% decrease in Q4 profits, but a 16% revenue increase for the entire company. These less than stellar figures were sweetened by a generous share buy-back program that was announced at the same time as the results, and by Microsoft’s bullish growth outlook.

The Verdict?

Yahoo! has definitely fallen out of favor with investors who are worried the company has missed the boat in the community space and is falling further behind Google in the search game - just like MSN certainly doesn’t seem to be gaining any search ground just yet. This impression was supported by the fact that Yahoo! announced delays in launching their new advertising software, which was supposed to help the company improve the monetization of searches.

While some of Google’s underlying trends don’t look too exciting either, investors are simply in awe of Google’s paid search juggernaut that seems to be generating limitless growth in advertising revenue.