Novice Investing - Yawn at Yahoo!

Date: Monday 01st 2008f December 2008 05:49:48 PM

Yawn at Yahoo! - 07/19/2006

By: Hari Wibowo

Yahoo! Inc. (YHOO), the second biggest search engine on the planet, reported second quarter earning that disappoint expectations. Profit fell to 11 cents per share versus 12 cents expectations. For the full year, the company projects revenue of between $ 4.6 - $ 4.85 Billion. Meanwhile, analysts were expecting $ 4.78 Billion.

While Yahoo! is a distant second in the search engine market, it does boast a 106 Million monthly US visitors, up 9% from a year ago. Both Yahoo! and Google are benefited from the shift of advertising online and Yahoo! has a lot of content for visitors to go to. Further, Yahoo! has a subscription based business such as broadband access, premium mail services, dating service or gaming community. All these contribute $ 190 Million in revenue or 12% of total.

Four five years ago, Yahoo! was the king of search. Google was virtually non existent back then. How time has changed. Google's search on focus (served with profitable unintrusive ad) has propelled it to the number one spot. While Yahoo! struggles to produce $ 4.7 Billion in revenue, Google has already produced $ 6.14 Billion last year. This year, it is expected to earn more.

The reason? We believe it is the search quality. Google derives 98% of its revenue from the search business. While most major media reports that Google has a 50% market in the search market versus 29% for Yahoo!, one blog in Alexa beg to differ. The argument is that Google derives almost 80% of traffic to various websites versus 9% for Yahoo!, the number two contender. That is about ten times more traffic from Google than from Yahoo!, a wildly significant difference.

Besides search accuracy, you can see the difference of search result of the phrase 'investing' for both Google and Yahoo!. The results are presented below. Let us dissect both search engines. One thing noticeable is how cluttered a Yahoo! search page is. You can see 4 lines of advertisement at the top result and another line for Yahoo's content getting priority over the rest of the search result. Furthermore, Yahoo! will give you search suggestion for this term such as 'real estate investing', 'investing money' and 'online investing'. To make your eyes sick, Yahoo! also has several lines of advertisement and one line from Yahoo! answers at the bottom of the search result.

Contrast that with Google's simple-to-understand interface. Two lines of advertising at the top and then followed by the search result. It has no advertisement at the bottom of the search result. Furthermore, Google's own webpage has no priority in the search result. As with Yahoo!, Google has lines of displayed advertisement on the right side. They need to make money after all.

Which one would you prefer? Simple search engine uncluttered with advertisement or search engine cluttered with suggestions and biased search result from its own content? Thus, did you see why Yahoo! lacks behind in term of search quality?

Want to be as powerful as Google? Simple. Improve your search quality, all else will fall in place. Stock price, too, will take care of itself. As with every businesses, once we take care of customers, customers will take care of us.

END

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Yahoo! Inc. (YHOO) or any other securities.

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