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Is the search game over? Has Google
(GOOG - Analyst Report) already won
the war against its competitors? Following the sketchy tech earnings of
4Q12 in late January, it was clear that investors would seek a
safe haven from volatility while still wanting to stay invested in
the tech space, and in that instance, Google was the play.
(YHOO - Analyst Report) has seen its
stock come back to life after it tapped former Google employee
Marissa Mayer to the new CEO. The anticipation of a potential
windfall from an Alibaba IPO has also impacted shares. When it
comes to search, the story is far less pretty.
Mister Softee as its called by traders, or Microsoft
(MSFT - Analyst Report) as its known
by almost everyone else has seen market share increase, but its
come at significant costs. After a great strategic move in its
attempted acquisition of Yahoo!, it may lose its search deal with
the company and faces stiff pressures from several other spots
Phoning It In
Yahoo! has by and large stayed out of the phone wars. They have
opted to remain more of a content and technology company that is
agnostic to the device that consumers use.
Microsoft, on the other hand does have a stake in the phone wars.
They have the windows operating system out on some select phones,
but they are far behind the market leaders Apple and Google.
A big winner in the mobile phone business has been Google. Its
android operating system has grown substantially is a short amount
of time. Most reports have Google leading Apple in terms of mobile
market share by a 70-30 margin.
The importance of the phone wars is very high, and a primary
reason that Google gives away is operating system for free. They
want to be on the devices people use to search the web, and when
mobile search pricing improves, Google will stand to have the most
to gain. Below is chart of mobile search market share from
The thing to note from this chart is the market share difference
between Yahoo and Bing (MSFT - Analyst Report).
Searching on the Reg
Desktop searches are still the bread and butter of the search
industry. It is far and away larger and more profitable than the
mobile segment of the business.
When we look at the market share breakdown for desktop searches,
we see that Google increases its lead over the competition.
2 3's vs a 2
Right now, both Yahoo! and Microsoft are Zacks Rank #3 (Hold)
stocks, while Google is a Zacks Rank #2 (Buy). One the major
components of the Zacks Rank is the trend of earnings estimates,
so let's take a look at the how each one has been trending.
Microsoft has seen its estimates consistently tick lower throughout
2012. The Zacks Consensus Estimate for 2013 earnings peaked at
$3.09 in June 2012, but then tumbled to $3.01 in September and
closed the year at $2.88. The current estimate is calling for
$2.84 for 2013.
Yahoo! has seen a better picture, but still one that is not what
most investors that focus on earnings are looking for. Over the
same time period mentioned above, YHOO has seen its Zacks
Consensus Estimate move from $1.08 to $1.13 and then closing the
year out at $1.12. The current Zacks Consensus Estimate for YHOO
is all the way back to $1.08 for 2013.
Thing aren't much different for Google. Estimates have moved from
$44.42 to $41.83 and closed the year at $38.92. The current Zacks
Consensus Estimate for 2013 is $38.38. The difference here is that
the current estimate is up from a bottom $38.06 in February, where
as the other companies are not seeing that same "uptick."
Google is mostly search, but it has it fingers in a lot of pies.
Yahoo has a potential windfall coming right around the corner in
the form of an IPO from Alibaba as well as new leadership.
Microsoft continues to try to gain mind share and market share in
the online world. At this point, the clear winner has been Google
and given its higher rank and almost a defensive style name in
technology, it might be the best investment of the three during
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Brian Bolan is a Stock Strategist
Zacks.com. He is the Editor in charge of the Zacks Home Run Investor
service, a Buy and Hold service where he recommends the
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