Tuesday, March 1, 2005
Google vs Yahoo!
A contrast of two rivals, Google (market cap of $51B) and Yahoo! (market cap of $44B) in this Wall Street Journal story (subscription required), highlights how Google's straetgy may be more profitable since it posted an operating profit of $1.1B vs Yahoo's $700M although net income as a percentage of revenue was higher for Yahoo.
At a November investors' conference, held by Morgan Stanley & Co., Chairman and CEO Mr. Semel noted that Yahoo has various ways of making money: search and display ads, fee-based services and online listings, such as help-wanted ads. "We sleep better at night knowing that we have three sources of revenue," he said. Mr. Semel, the former chairman and co-CEO of Time Warner Inc.'s Warner Bros., declined to be interviewed for this article.
One statistic highlights the divergence between the two rivals: Yahoo users spend an average of 4.8 hours a month on its site, eight times the 35 minutes logged by users on Google, according to consumer research firm comScore Networks Inc.
Google executives say they wouldn't mind if users spent even less time on their site as long as they conducted more searches. Each search generates a new set of tailored ads. At Yahoo, users stick around to send instant messages, check stock prices or watch music videos. A Knicks fan may jump to Yahoo's sports site, where Yahoo sells ads, and then pay to join a Yahoo fantasy-sports league, where it costs as much as $124.95 to run your own league.