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Monday, July 24, 2006

Google’s and Yahoo!’s Results: A Vastly Different Picture

Posted by @ 3:03 am
5
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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.









Discussion (5 - comments)

Google’s success can be attributed to their friendliness toward users, webmasters and adsense partners. The Google Adsense program allows almost anyone to participate — Yahoo and MSN want to choose who can participate. If your site isn’t drawing millions of visitors they aren’t interested. The same attitude applies to the ease of submitting or suggesting a website for listing in their search engines. Google allows everyone to submit, Yahoo requires an account (free but an unnecessary obstacle) and until recently MSN tried to force everyone to purchase listings.

The attitudes are intangibles but they do affect loyalty. And often loyalty translates to the bottom line.

By Anonymous - July 25, 2006



nice post

By aa - July 26, 2006



I’m finding I’m more loyal to Yahoo! when advertising private health insurance because:
a) I’ve had a yahoo email for years
b) Their CPC rates are around half or less than Google’s for the same keywords and
c) I like the fact that I have a consultant to do much of the hard yakka for me!

GMHBA Health Insurance

By josiegrove - July 31, 2006



an interesting information, google is getting too expensive and could get out of favor soon! buyllp

By buyllp.com - August 1, 2006



I receive more hits from Google than either Yahoo or MSN, however you can’t overlook them as they both have loyal searchers.
Bill Beard
http://www.billbeardcostarica.com

By Bill - August 8, 2006




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