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Tuesday, April 14, 2009
A couple of interesting interventions over the past week from the Wall Street analyst community, no doubt weighing heavily on decisions forthcoming from the major search engine companies.
Today's talk is of number-crunching by Jefferies analyst Youssef Squali that points to a potential $1 billion saving that could be realized if Yahoo outsourced search to Microsoft. Any partnership scenario would have significant and positive financial outcomes for the two companies, it seems.
Prior to that we had Credit Suisse's view that Google's YouTube division currently loses over $400 million a year. Turning on the monetization spigot isn't something that can happen overnight, and that gap's just a bit too wide to gradually make up over several years, especially given the harder sell facing most ad formats in an economic downturn. So there, we can expect major changes.
It's been fashionable to say Wall Street doesn't dictate how the search engines are run. But certainly, by bringing these numbers to light and forcing them onto the agenda -- without prompting from the companies being analyzed, and no doubt out of step with those companies' wishes to soft-pedal their current inefficiencies -- the investor community is setting itself up as an influencer.
And rightly so. These are public companies. Is it OK for them to waste gobs of banked profits because decisions aren't being made crisply enough? Is it OK for them to expect to gloss over the specific P&L's of specific parts of these companies, as long as they can put a nice sheen on the aggregate results each quarter and year end? It's obvious Wall Street doesn't believe so.Labels: goog, msft-yhoo
Posted by
Andrew Goodman
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D'oh!
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